270.HK WACC - Weighted Average Cost of Capital

The WACC of Guangdong Investment Ltd (270.HK) is 6.3%.

The Cost of Equity of Guangdong Investment Ltd (270.HK) is 8.05%.

The Cost of Debt of Guangdong Investment Ltd (270.HK) is 4.60%.

	Range	Selected
Cost of equity	6.30% - 9.80%	8.05%
Tax rate	27.40% - 29.60%	28.50%
Cost of debt	4.30% - 4.90%	4.60%
WACC	5.1% - 7.5%	6.3%

WACC

270.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.57	0.85

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.30%	9.80%

Tax rate	27.40%	29.60%
Debt/Equity ratio	0.56	0.56
Cost of debt	4.30%	4.90%

After-tax WACC	5.1%	7.5%


Selected WACC	6.3%

270.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 270.HK:

cost_of_equity (8.05%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.57) + 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.