399.HK WACC - Weighted Average Cost of Capital

The WACC of Innovative Pharmaceutical Biotech Ltd (399.HK) is 4.7%.

The Cost of Equity of Innovative Pharmaceutical Biotech Ltd (399.HK) is 6.70%.

The Cost of Debt of Innovative Pharmaceutical Biotech Ltd (399.HK) is 5.50%.

	Range	Selected
Cost of equity	4.50% - 8.90%	6.70%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	4.00% - 7.00%	5.50%
WACC	3.4% - 6.1%	4.7%

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	0.27	0.72

Additional risk adjustments	0.0%	0.5%
Cost of equity	4.50%	8.90%

Tax rate	22.10%	22.30%
Debt/Equity ratio	4.19	4.19
Cost of debt	4.00%	7.00%

After-tax WACC	3.4%	6.1%


Selected WACC	4.7%

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 (6.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.27) + 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.