3990.HK WACC - Weighted Average Cost of Capital

The WACC of Midea Real Estate Holding Ltd (3990.HK) is 6.0%.

The Cost of Equity of Midea Real Estate Holding Ltd (3990.HK) is 6.25%.

The Cost of Debt of Midea Real Estate Holding Ltd (3990.HK) is 6.80%.

	Range	Selected
Cost of equity	5.30% - 7.20%	6.25%
Tax rate	33.40% - 37.40%	35.40%
Cost of debt	5.50% - 8.10%	6.80%
WACC	5.1% - 6.9%	6.0%

WACC

3990.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.41	0.48

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.30%	7.20%

Tax rate	33.40%	37.40%
Debt/Equity ratio	0.15	0.15
Cost of debt	5.50%	8.10%

After-tax WACC	5.1%	6.9%


Selected WACC	6.0%

3990.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 3990.HK:

cost_of_equity (6.25%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.41) + 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.