399.HK WACC - Weighted Average Cost of Capital

The WACC of Innovative Pharmaceutical Biotech Ltd (399.HK) is 5.4%.

The Cost of Equity of Innovative Pharmaceutical Biotech Ltd (399.HK) is 11.55%.

The Cost of Debt of Innovative Pharmaceutical Biotech Ltd (399.HK) is 4.25%.

	Range	Selected
Cost of equity	7.20% - 15.90%	11.55%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.2% - 6.7%	5.4%

WACC

399.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.72	1.73

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.20%	15.90%

Tax rate	22.10%	22.30%
Debt/Equity ratio	2.89	2.89
Cost of debt	4.00%	4.50%

After-tax WACC	4.2%	6.7%


Selected WACC	5.4%

399.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 399.HK:

cost_of_equity (11.55%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.72) + 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.