576.HK WACC - Weighted Average Cost of Capital

The WACC of Zhejiang Expressway Co Ltd (576.HK) is 5.4%.

The Cost of Equity of Zhejiang Expressway Co Ltd (576.HK) is 9.95%.

The Cost of Debt of Zhejiang Expressway Co Ltd (576.HK) is 4.25%.

	Range	Selected
Cost of equity	7.40% - 12.50%	9.95%
Tax rate	17.80% - 20.70%	19.25%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.5% - 6.3%	5.4%

WACC

576.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.76	1.23

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.40%	12.50%

Tax rate	17.80%	20.70%
Debt/Equity ratio	2.27	2.27
Cost of debt	4.00%	4.50%

After-tax WACC	4.5%	6.3%


Selected WACC	5.4%

576.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 576.HK:

cost_of_equity (9.95%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.76) + 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.