512.HK WACC - Weighted Average Cost of Capital

The WACC of China Grand Pharmaceutical and Healthcare Holdings Ltd (512.HK) is 6.9%.

The Cost of Equity of China Grand Pharmaceutical and Healthcare Holdings Ltd (512.HK) is 7.60%.

The Cost of Debt of China Grand Pharmaceutical and Healthcare Holdings Ltd (512.HK) is 4.25%.

	Range	Selected
Cost of equity	6.30% - 8.90%	7.60%
Tax rate	13.90% - 15.10%	14.50%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.8% - 8.0%	6.9%

WACC

512.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.58	0.72

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.30%	8.90%

Tax rate	13.90%	15.10%
Debt/Equity ratio	0.21	0.21
Cost of debt	4.00%	4.50%

After-tax WACC	5.8%	8.0%


Selected WACC	6.9%

512.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 512.HK:

cost_of_equity (7.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.58) + 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.