3836.HK WACC - Weighted Average Cost of Capital

The WACC of China Harmony Auto Holding Ltd (3836.HK) is 5.2%.

The Cost of Equity of China Harmony Auto Holding Ltd (3836.HK) is 8.05%.

The Cost of Debt of China Harmony Auto Holding Ltd (3836.HK) is 5.50%.

	Range	Selected
Cost of equity	5.30% - 10.80%	8.05%
Tax rate	18.90% - 27.90%	23.40%
Cost of debt	4.00% - 7.00%	5.50%
WACC	3.8% - 6.5%	5.2%

WACC

3836.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.4	0.99

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.30%	10.80%

Tax rate	18.90%	27.90%
Debt/Equity ratio	2.87	2.87
Cost of debt	4.00%	7.00%

After-tax WACC	3.8%	6.5%


Selected WACC	5.2%

3836.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 3836.HK:

cost_of_equity (8.05%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.4) + 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.