2588.HK WACC - Weighted Average Cost of Capital

The WACC of BOC Aviation Ltd (2588.HK) is 6.6%.

The Cost of Equity of BOC Aviation Ltd (2588.HK) is 10.30%.

The Cost of Debt of BOC Aviation Ltd (2588.HK) is 6.05%.

	Range	Selected
Cost of equity	8.00% - 12.60%	10.30%
Tax rate	11.20% - 11.60%	11.40%
Cost of debt	4.00% - 8.10%	6.05%
WACC	4.7% - 8.5%	6.6%

WACC

2588.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.86	1.25

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.00%	12.60%

Tax rate	11.20%	11.60%
Debt/Equity ratio	2.97	2.97
Cost of debt	4.00%	8.10%

After-tax WACC	4.7%	8.5%


Selected WACC	6.6%

2588.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 2588.HK:

cost_of_equity (10.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.86) + 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.