306.HK WACC - Weighted Average Cost of Capital

The WACC of Kwoon Chung Bus Holdings Ltd (306.HK) is 7.5%.

The Cost of Equity of Kwoon Chung Bus Holdings Ltd (306.HK) is 11.35%.

The Cost of Debt of Kwoon Chung Bus Holdings Ltd (306.HK) is 7.70%.

	Range	Selected
Cost of equity	8.00% - 14.70%	11.35%
Tax rate	15.20% - 26.50%	20.85%
Cost of debt	4.00% - 11.40%	7.70%
WACC	4.8% - 10.2%	7.5%

WACC

306.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	1.55

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.00%	14.70%

Tax rate	15.20%	26.50%
Debt/Equity ratio	2.43	2.43
Cost of debt	4.00%	11.40%

After-tax WACC	4.8%	10.2%


Selected WACC	7.5%

306.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 306.HK:

cost_of_equity (11.35%) = 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.