3898.HK WACC - Weighted Average Cost of Capital

The WACC of Zhuzhou CRRC Times Electric Co Ltd (3898.HK) is 7.9%.

The Cost of Equity of Zhuzhou CRRC Times Electric Co Ltd (3898.HK) is 7.95%.

The Cost of Debt of Zhuzhou CRRC Times Electric Co Ltd (3898.HK) is 5.00%.

	Range	Selected
Cost of equity	6.30% - 9.60%	7.95%
Tax rate	10.80% - 11.30%	11.05%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.3% - 9.5%	7.9%

WACC

3898.HK WACC calculation

Category	Low	High

Long-term bond rate	1.6%	2.1%
Equity market risk premium	5.8%	6.8%
Adjusted beta	0.82	1.03

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.30%	9.60%

Tax rate	10.80%	11.30%
Debt/Equity ratio	0.01	0.01
Cost of debt	5.00%	5.00%

After-tax WACC	6.3%	9.5%


Selected WACC	7.9%

3898.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 3898.HK:

cost_of_equity (7.95%) = risk_free_rate (1.85%) + equity_risk_premium (6.30%) * adjusted_beta (0.82) + 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.