3869.HK WACC - Weighted Average Cost of Capital

The WACC of Hospital Corporation of China Ltd (3869.HK) is 6.1%.

The Cost of Equity of Hospital Corporation of China Ltd (3869.HK) is 9.05%.

The Cost of Debt of Hospital Corporation of China Ltd (3869.HK) is 4.25%.

	Range	Selected
Cost of equity	5.90% - 12.20%	9.05%
Tax rate	12.90% - 20.40%	16.65%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.6% - 7.6%	6.1%

WACC

3869.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.5	1.2

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.90%	12.20%

Tax rate	12.90%	20.40%
Debt/Equity ratio	1.18	1.18
Cost of debt	4.00%	4.50%

After-tax WACC	4.6%	7.6%


Selected WACC	6.1%

3869.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 3869.HK:

cost_of_equity (9.05%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.5) + 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.