2096.HK
Simcere Pharmaceutical Group Ltd
Price:  
10.7 
HKD
Volume:  
10,799,000
China | Pharmaceuticals

2096.HK WACC - Weighted Average Cost of Capital

The WACC of Simcere Pharmaceutical Group Ltd (2096.HK) is 10.0%.

The Cost of Equity of Simcere Pharmaceutical Group Ltd (2096.HK) is 10.35%.
The Cost of Debt of Simcere Pharmaceutical Group Ltd (2096.HK) is 4.25%.

RangeSelected
Cost of equity9.1% - 11.6%10.35%
Tax rate6.0% - 8.4%7.2%
Cost of debt4.0% - 4.5%4.25%
WACC8.9% - 11.2%10.0%
WACC

2096.HK WACC calculation

CategoryLowHigh
Long-term bond rate2.9%3.4%
Equity market risk premium6.0%7.0%
Adjusted beta1.041.1
Additional risk adjustments0.0%0.5%
Cost of equity9.1%11.6%
Tax rate6.0%8.4%
Debt/Equity ratio
0.050.05
Cost of debt4.0%4.5%
After-tax WACC8.9%11.2%
Selected WACC10.0%

2096.HK's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for 2096.HK:

cost_of_equity (10.35%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.04) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.