570.HK WACC - Weighted Average Cost of Capital

The WACC of China Traditional Chinese Medicine Holdings Co Ltd (570.HK) is 7.1%.

The Cost of Equity of China Traditional Chinese Medicine Holdings Co Ltd (570.HK) is 7.95%.

The Cost of Debt of China Traditional Chinese Medicine Holdings Co Ltd (570.HK) is 6.15%.

	Range	Selected
Cost of equity	6.60% - 9.30%	7.95%
Tax rate	15.10% - 16.10%	15.60%
Cost of debt	4.20% - 8.10%	6.15%
WACC	5.7% - 8.6%	7.1%

WACC

570.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.62	0.78

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.60%	9.30%

Tax rate	15.10%	16.10%
Debt/Equity ratio	0.42	0.42
Cost of debt	4.20%	8.10%

After-tax WACC	5.7%	8.6%


Selected WACC	7.1%

570.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 570.HK:

cost_of_equity (7.95%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.62) + 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.