3903.HK WACC - Weighted Average Cost of Capital

The WACC of Hanhua Financial Holding Co Ltd (3903.HK) is 4.5%.

The Cost of Equity of Hanhua Financial Holding Co Ltd (3903.HK) is 6.60%.

The Cost of Debt of Hanhua Financial Holding Co Ltd (3903.HK) is 6.25%.

	Range	Selected
Cost of equity	5.50% - 7.70%	6.60%
Tax rate	31.50% - 39.90%	35.70%
Cost of debt	5.50% - 7.00%	6.25%
WACC	4.1% - 4.9%	4.5%

WACC

3903.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.44	0.55

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.50%	7.70%

Tax rate	31.50%	39.90%
Debt/Equity ratio	4.19	4.19
Cost of debt	5.50%	7.00%

After-tax WACC	4.1%	4.9%


Selected WACC	4.5%

3903.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 3903.HK:

cost_of_equity (6.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.44) + 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.