3768.HK WACC - Weighted Average Cost of Capital

The WACC of Kunming Dianchi Water Treatment Co Ltd (3768.HK) is 6.6%.

The Cost of Equity of Kunming Dianchi Water Treatment Co Ltd (3768.HK) is 22.60%.

The Cost of Debt of Kunming Dianchi Water Treatment Co Ltd (3768.HK) is 5.35%.

	Range	Selected
Cost of equity	17.80% - 27.40%	22.60%
Tax rate	15.20% - 15.80%	15.50%
Cost of debt	4.20% - 6.50%	5.35%
WACC	5.2% - 8.0%	6.6%

WACC

3768.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	2.5	3.37

Additional risk adjustments	0.0%	0.5%
Cost of equity	17.80%	27.40%

Tax rate	15.20%	15.80%
Debt/Equity ratio	7.54	7.54
Cost of debt	4.20%	6.50%

After-tax WACC	5.2%	8.0%


Selected WACC	6.6%

3768.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 3768.HK:

cost_of_equity (22.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (2.5) + 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.