728.HK WACC - Weighted Average Cost of Capital

The WACC of China Telecom Corp Ltd (728.HK) is 6.5%.

The Cost of Equity of China Telecom Corp Ltd (728.HK) is 8.10%.

The Cost of Debt of China Telecom Corp Ltd (728.HK) is 4.25%.

	Range	Selected
Cost of equity	6.60% - 9.60%	8.10%
Tax rate	23.90% - 24.40%	24.15%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.4% - 7.5%	6.5%

WACC

728.HK WACC calculation

Category	Low	High

Long-term bond rate	1.4%	1.9%
Equity market risk premium	5.8%	6.8%
Adjusted beta	0.89	1.06

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.60%	9.60%

Tax rate	23.90%	24.40%
Debt/Equity ratio	0.5	0.5
Cost of debt	4.00%	4.50%

After-tax WACC	5.4%	7.5%


Selected WACC	6.5%

728.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 728.HK:

cost_of_equity (8.10%) = risk_free_rate (1.65%) + equity_risk_premium (6.30%) * adjusted_beta (0.89) + 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.