The WACC of Kaisa Health Group Holdings Ltd (876.HK) is 7.0%.
| Range | Selected | |
| Cost of equity | 5.30% - 8.00% | 6.65% |
| Tax rate | 1.80% - 2.70% | 2.25% |
| Cost of debt | 7.00% - 13.00% | 10.00% |
| WACC | 5.5% - 8.5% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.24 | 0.45 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 5.30% | 8.00% |
| Tax rate | 1.80% | 2.70% |
| Debt/Equity ratio | 0.11 | 0.11 |
| Cost of debt | 7.00% | 13.00% |
| After-tax WACC | 5.5% | 8.5% |
| Selected WACC | 7.0% | |
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 876.HK:
cost_of_equity (6.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.24) + risk_adjustments (1.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.