412.HK WACC - Weighted Average Cost of Capital

The WACC of China Shandong Hi-Speed Financial Group Ltd (412.HK) is 7.2%.

The Cost of Equity of China Shandong Hi-Speed Financial Group Ltd (412.HK) is 6.75%.

The Cost of Debt of China Shandong Hi-Speed Financial Group Ltd (412.HK) is 9.85%.

	Range	Selected
Cost of equity	5.40% - 8.10%	6.75%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	5.10% - 14.60%	9.85%
WACC	4.6% - 9.8%	7.2%

WACC

412.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.43	0.6

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.40%	8.10%

Tax rate	22.10%	22.30%
Debt/Equity ratio	1.14	1.14
Cost of debt	5.10%	14.60%

After-tax WACC	4.6%	9.8%


Selected WACC	7.2%

412.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 412.HK:

cost_of_equity (6.75%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.43) + 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.