3883.HK WACC - Weighted Average Cost of Capital

The WACC of China Aoyuan Group Ltd (3883.HK) is 3.9%.

The Cost of Equity of China Aoyuan Group Ltd (3883.HK) is 57.65%.

The Cost of Debt of China Aoyuan Group Ltd (3883.HK) is 4.75%.

	Range	Selected
Cost of equity	47.10% - 68.20%	57.65%
Tax rate	16.10% - 33.30%	24.70%
Cost of debt	4.00% - 5.50%	4.75%
WACC	3.6% - 4.1%	3.9%

WACC

3883.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	7.4	9.21

Additional risk adjustments	0.0%	0.5%
Cost of equity	47.10%	68.20%

Tax rate	16.10%	33.30%
Debt/Equity ratio	159.82	159.82
Cost of debt	4.00%	5.50%

After-tax WACC	3.6%	4.1%


Selected WACC	3.9%

3883.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 3883.HK:

cost_of_equity (57.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (7.4) + 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.