2328.HK WACC - Weighted Average Cost of Capital

The WACC of PICC Property and Casualty Co Ltd (2328.HK) is 10.5%.

The Cost of Equity of PICC Property and Casualty Co Ltd (2328.HK) is 10.90%.

The Cost of Debt of PICC Property and Casualty Co Ltd (2328.HK) is 5.00%.

	Range	Selected
Cost of equity	9.00% - 12.80%	10.90%
Tax rate	14.30% - 14.80%	14.55%
Cost of debt	5.00% - 5.00%	5.00%
WACC	8.7% - 12.3%	10.5%

WACC

2328.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.03	1.29

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.00%	12.80%

Tax rate	14.30%	14.80%
Debt/Equity ratio	0.07	0.07
Cost of debt	5.00%	5.00%

After-tax WACC	8.7%	12.3%


Selected WACC	10.5%

2328.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 2328.HK:

cost_of_equity (10.90%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.03) + 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.