489.HK WACC - Weighted Average Cost of Capital

The WACC of Dongfeng Motor Group Co Ltd (489.HK) is 7.8%.

The Cost of Equity of Dongfeng Motor Group Co Ltd (489.HK) is 18.45%.

The Cost of Debt of Dongfeng Motor Group Co Ltd (489.HK) is 5.50%.

	Range	Selected
Cost of equity	15.60% - 21.30%	18.45%
Tax rate	9.50% - 10.90%	10.20%
Cost of debt	4.00% - 7.00%	5.50%
WACC	6.1% - 9.4%	7.8%

WACC

489.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	2.13	2.5

Additional risk adjustments	0.0%	0.5%
Cost of equity	15.60%	21.30%

Tax rate	9.50%	10.90%
Debt/Equity ratio	3.76	3.76
Cost of debt	4.00%	7.00%

After-tax WACC	6.1%	9.4%


Selected WACC	7.8%

489.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 489.HK:

cost_of_equity (18.45%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (2.13) + 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.