489.HK WACC - Weighted Average Cost of Capital
The WACC of Dongfeng Motor Group Co Ltd (489.HK) is 7.8%.
| Range | Selected | |
| Cost of equity | 14.5% - 19.5% | 17% |
| Tax rate | 9.5% - 10.9% | 10.2% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 6.2% - 9.4% | 7.8% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.95 | 2.24 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 14.5% | 19.5% |
| Tax rate | 9.5% | 10.9% |
| Debt/Equity ratio | 3.22 | 3.22 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 6.2% | 9.4% |
| Selected WACC | 7.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 489.HK | Dongfeng Motor Group Co Ltd | 3.22 | 1.08 | 0.28 |
| 000550.SZ | Jiangling Motors Corp Ltd | 0.12 | 1.29 | 1.17 |
| 000625.SZ | Chongqing Changan Automobile Co Ltd | 0.29 | 1.12 | 0.89 |
| 000800.SZ | FAW Jiefang Group Co Ltd | 0.46 | 0.77 | 0.54 |
| 1958.HK | BAIC Motor Corp Ltd | 0.57 | 0.91 | 0.6 |
| 600166.SS | Beiqi Foton Motor Co Ltd | 0.69 | 1.03 | 0.64 |
| 600418.SS | Anhui Jianghuai Automobile Group Corp Ltd | 0.2 | 0.55 | 0.46 |
| 600733.SS | BAIC BluePark New Energy Technology Co Ltd | 0.45 | 1.65 | 1.18 |
| 601238.SS | Guangzhou Automobile Group Co Ltd | 0.72 | 1.08 | 0.66 |
| 601633.SS | Great Wall Motor Co Ltd | 0.31 | 1.09 | 0.85 |
| Low | High | |
| Unlevered beta | 0.62 | 0.74 |
| Relevered beta | 2.42 | 2.85 |
| Adjusted relevered beta | 1.95 | 2.24 |
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 (17.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.95) + 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.