2696.HK WACC - Weighted Average Cost of Capital

The WACC of Shanghai Henlius Biotech Inc (2696.HK) is 9.0%.

The Cost of Equity of Shanghai Henlius Biotech Inc (2696.HK) is 10.00%.

The Cost of Debt of Shanghai Henlius Biotech Inc (2696.HK) is 4.25%.

	Range	Selected
Cost of equity	8.30% - 11.70%	10.00%
Tax rate	1.80% - 2.90%	2.35%
Cost of debt	4.00% - 4.50%	4.25%
WACC	7.5% - 10.4%	9.0%

WACC

2696.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.9	1.12

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.30%	11.70%

Tax rate	1.80%	2.90%
Debt/Equity ratio	0.2	0.2
Cost of debt	4.00%	4.50%

After-tax WACC	7.5%	10.4%


Selected WACC	9.0%

2696.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 2696.HK:

cost_of_equity (10.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.9) + 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.