658.HK WACC - Weighted Average Cost of Capital

The WACC of China High Speed Transmission Equipment Group Co Ltd (658.HK) is 8.0%.

The Cost of Equity of China High Speed Transmission Equipment Group Co Ltd (658.HK) is 13.55%.

The Cost of Debt of China High Speed Transmission Equipment Group Co Ltd (658.HK) is 8.35%.

	Range	Selected
Cost of equity	7.90% - 19.20%	13.55%
Tax rate	15.00% - 20.40%	17.70%
Cost of debt	7.00% - 9.70%	8.35%
WACC	6.3% - 9.6%	8.0%

WACC

658.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.84	2.2

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	19.20%

Tax rate	15.00%	20.40%
Debt/Equity ratio	5.05	5.05
Cost of debt	7.00%	9.70%

After-tax WACC	6.3%	9.6%


Selected WACC	8.0%

658.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 658.HK:

cost_of_equity (13.55%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.84) + 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.