867.HK WACC - Weighted Average Cost of Capital

The WACC of China Medical System Holdings Ltd (867.HK) is 9.1%.

The Cost of Equity of China Medical System Holdings Ltd (867.HK) is 9.35%.

The Cost of Debt of China Medical System Holdings Ltd (867.HK) is 4.25%.

	Range	Selected
Cost of equity	8.00% - 10.70%	9.35%
Tax rate	12.80% - 14.60%	13.70%
Cost of debt	4.00% - 4.50%	4.25%
WACC	7.8% - 10.4%	9.1%

WACC

867.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.86	0.98

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.00%	10.70%

Tax rate	12.80%	14.60%
Debt/Equity ratio	0.05	0.05
Cost of debt	4.00%	4.50%

After-tax WACC	7.8%	10.4%


Selected WACC	9.1%

867.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 867.HK:

cost_of_equity (9.35%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.86) + 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.