3877.HK WACC - Weighted Average Cost of Capital

The WACC of CSSC Hong Kong Shipping Co Ltd (3877.HK) is 5.8%.

The Cost of Equity of CSSC Hong Kong Shipping Co Ltd (3877.HK) is 8.10%.

The Cost of Debt of CSSC Hong Kong Shipping Co Ltd (3877.HK) is 4.55%.

	Range	Selected
Cost of equity	6.50% - 9.70%	8.10%
Tax rate	1.20% - 1.40%	1.30%
Cost of debt	4.00% - 5.10%	4.55%
WACC	4.9% - 6.7%	5.8%

WACC

3877.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.61	0.84

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.50%	9.70%

Tax rate	1.20%	1.40%
Debt/Equity ratio	1.87	1.87
Cost of debt	4.00%	5.10%

After-tax WACC	4.9%	6.7%


Selected WACC	5.8%

3877.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 3877.HK:

cost_of_equity (8.10%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.61) + 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.