2319.HK WACC - Weighted Average Cost of Capital

The WACC of China Mengniu Dairy Co Ltd (2319.HK) is 5.6%.

The Cost of Equity of China Mengniu Dairy Co Ltd (2319.HK) is 6.55%.

The Cost of Debt of China Mengniu Dairy Co Ltd (2319.HK) is 4.55%.

	Range	Selected
Cost of equity	5.60% - 7.50%	6.55%
Tax rate	21.70% - 31.20%	26.45%
Cost of debt	4.00% - 5.10%	4.55%
WACC	4.9% - 6.3%	5.6%

WACC

2319.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.46	0.52

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.60%	7.50%

Tax rate	21.70%	31.20%
Debt/Equity ratio	0.42	0.42
Cost of debt	4.00%	5.10%

After-tax WACC	4.9%	6.3%


Selected WACC	5.6%

2319.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 2319.HK:

cost_of_equity (6.55%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.46) + 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.