3689.HK WACC - Weighted Average Cost of Capital

The WACC of Guangdong Kanghua Healthcare Co Ltd (3689.HK) is 7.1%.

The Cost of Equity of Guangdong Kanghua Healthcare Co Ltd (3689.HK) is 8.80%.

The Cost of Debt of Guangdong Kanghua Healthcare Co Ltd (3689.HK) is 4.90%.

	Range	Selected
Cost of equity	6.30% - 11.30%	8.80%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	4.60% - 5.20%	4.90%
WACC	5.4% - 8.8%	7.1%

WACC

3689.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.58	1.07

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.30%	11.30%

Tax rate	22.10%	22.30%
Debt/Equity ratio	0.54	0.54
Cost of debt	4.60%	5.20%

After-tax WACC	5.4%	8.8%


Selected WACC	7.1%

3689.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 3689.HK:

cost_of_equity (8.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.58) + 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.