6830.HK WACC - Weighted Average Cost of Capital

The WACC of Huazhong In Vehicle Holdings Co Ltd (6830.HK) is 8.0%.

The Cost of Equity of Huazhong In Vehicle Holdings Co Ltd (6830.HK) is 13.80%.

The Cost of Debt of Huazhong In Vehicle Holdings Co Ltd (6830.HK) is 4.60%.

	Range	Selected
Cost of equity	11.20% - 16.40%	13.80%
Tax rate	17.90% - 17.90%	17.90%
Cost of debt	4.10% - 5.10%	4.60%
WACC	6.6% - 9.3%	8.0%

WACC

6830.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.4	1.8

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.20%	16.40%

Tax rate	17.90%	17.90%
Debt/Equity ratio	1.38	1.38
Cost of debt	4.10%	5.10%

After-tax WACC	6.6%	9.3%


Selected WACC	8.0%

6830.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 6830.HK:

cost_of_equity (13.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.4) + 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.