737.HK WACC - Weighted Average Cost of Capital
The WACC of Shenzhen Investment Holdings Bay Area Development Co Ltd (737.HK) is 5.9%.
| Range | Selected | |
| Cost of equity | 6.3% - 9.6% | 7.95% |
| Tax rate | 16.9% - 18.2% | 17.55% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 4.9% - 6.8% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.57 | 0.83 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.3% | 9.6% |
| Tax rate | 16.9% | 18.2% |
| Debt/Equity ratio | 0.89 | 0.89 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 4.9% | 6.8% |
| Selected WACC | 5.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 737.HK | Shenzhen Investment Holdings Bay Area Development Co Ltd | 0.89 | 0.16 | 0.09 |
| 000548.SZ | Hunan Investment Group Co Ltd | 0.08 | 1.18 | 1.11 |
| 1052.HK | Yuexiu Transport infrastructure Ltd | 3.04 | 0.45 | 0.13 |
| 152.HK | Shenzhen International Holdings Ltd | 3.17 | 0.64 | 0.18 |
| 1719.HK | China Infrastructure & Logistics Group Ltd | 0.25 | 0.28 | 0.23 |
| 269.HK | China Resources and Transportation Group Ltd | 116.54 | -0.49 | -0.01 |
| 498.HK | PYI Corporation Ltd | 1.14 | 1.03 | 0.53 |
| 600106.SS | Chongqing Road and Bridge Co Ltd | 0.18 | 0.94 | 0.82 |
| 6888.HK | Freetech Road Recycling Technology (Holdings) Ltd | 0.65 | 0.55 | 0.36 |
| META.JK | Nusantara Infrastructure Tbk PT | 0.11 | 1.35 | 1.23 |
| Low | High | |
| Unlevered beta | 0.21 | 0.43 |
| Relevered beta | 0.36 | 0.75 |
| Adjusted relevered beta | 0.57 | 0.83 |
737.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 737.HK:
cost_of_equity (7.95%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.57) + 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.