3768.HK WACC - Weighted Average Cost of Capital

The WACC of Kunming Dianchi Water Treatment Co Ltd (3768.HK) is 6.4%.

The Cost of Equity of Kunming Dianchi Water Treatment Co Ltd (3768.HK) is 22.80%.

The Cost of Debt of Kunming Dianchi Water Treatment Co Ltd (3768.HK) is 5.10%.

	Range	Selected
Cost of equity	19.00% - 26.60%	22.80%
Tax rate	15.20% - 15.80%	15.50%
Cost of debt	4.20% - 6.00%	5.10%
WACC	5.3% - 7.4%	6.4%

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	2.7	3.25

Additional risk adjustments	0.0%	0.5%
Cost of equity	19.00%	26.60%

Tax rate	15.20%	15.80%
Debt/Equity ratio	8.01	8.01
Cost of debt	4.20%	6.00%

After-tax WACC	5.3%	7.4%


Selected WACC	6.4%

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 (22.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (2.7) + 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.