The WACC of Beijing Enterprises Medical and Health Industry Group Ltd (2389.HK) is 5.9%.
Range | Selected | |
Cost of equity | 5.1% - 6.8% | 5.95% |
Tax rate | 3.6% - 6.4% | 5% |
Cost of debt | 4.0% - 7.0% | 5.5% |
WACC | 5.1% - 6.7% | 5.9% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.38 | 0.41 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.1% | 6.8% |
Tax rate | 3.6% | 6.4% |
Debt/Equity ratio | 0.06 | 0.06 |
Cost of debt | 4.0% | 7.0% |
After-tax WACC | 5.1% | 6.7% |
Selected WACC | 5.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
2389.HK | Beijing Enterprises Medical and Health Industry Group Ltd | 0.06 | 0.12 | 0.12 |
1298.HK | Yunnan Energy International Co Ltd | 0.8 | 0.22 | 0.12 |
1H3.SI | Clearbridge Health Ltd | 0.63 | -0.48 | -0.3 |
2293.HK | Bamboos Health Care Holdings Ltd | 0.29 | 0.12 | 0.09 |
362.HK | Xinyang Maojian Group Ltd | 57.75 | 0.3 | 0.01 |
556.HK | Pan Asia Environmental Protection Group Ltd | 0.02 | -0.29 | -0.28 |
8037.HK | China Biotech Services Holdings Ltd | 0.28 | 0.41 | 0.32 |
928.HK | Life Healthcare Group Ltd | 0.03 | 0.66 | 0.64 |
P8A.SI | Cordlife Group Ltd | 0.03 | 0.03 | 0.03 |
TTB.AX | Total Brain Ltd | 3.03 | 1.33 | 0.34 |
Low | High | |
Unlevered beta | 0.07 | 0.12 |
Relevered beta | 0.07 | 0.12 |
Adjusted relevered beta | 0.38 | 0.41 |
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 2389.HK:
cost_of_equity (5.95%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.38) + 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.