2689.HK WACC - Weighted Average Cost of Capital

The WACC of Nine Dragons Paper (Holdings) Ltd (2689.HK) is 6.4%.

The Cost of Equity of Nine Dragons Paper (Holdings) Ltd (2689.HK) is 10.85%.

The Cost of Debt of Nine Dragons Paper (Holdings) Ltd (2689.HK) is 6.05%.

	Range	Selected
Cost of equity	9.00% - 12.70%	10.85%
Tax rate	12.40% - 14.00%	13.20%
Cost of debt	4.00% - 8.10%	6.05%
WACC	4.7% - 8.2%	6.4%

WACC

2689.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	1.26

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.00%	12.70%

Tax rate	12.40%	14.00%
Debt/Equity ratio	3.67	3.67
Cost of debt	4.00%	8.10%

After-tax WACC	4.7%	8.2%


Selected WACC	6.4%

2689.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 2689.HK:

cost_of_equity (10.85%) = 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.