708.HK WACC - Weighted Average Cost of Capital

The WACC of China Evergrande New Energy Vehicle Group Ltd (708.HK) is 7.5%.

The Cost of Equity of China Evergrande New Energy Vehicle Group Ltd (708.HK) is 39.90%.

The Cost of Debt of China Evergrande New Energy Vehicle Group Ltd (708.HK) is 5.65%.

	Range	Selected
Cost of equity	16.40% - 63.40%	39.90%
Tax rate	3.20% - 4.50%	3.85%
Cost of debt	4.30% - 7.00%	5.65%
WACC	4.9% - 10.0%	7.5%

WACC

708.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	2.26	8.54

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.40%	63.40%

Tax rate	3.20%	4.50%
Debt/Equity ratio	15.93	15.93
Cost of debt	4.30%	7.00%

After-tax WACC	4.9%	10.0%


Selected WACC	7.5%

708.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 708.HK:

cost_of_equity (39.90%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (2.26) + 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.