952.HK WACC - Weighted Average Cost of Capital

The WACC of China Tonghai International Financial Ltd (952.HK) is 7.4%.

The Cost of Equity of China Tonghai International Financial Ltd (952.HK) is 8.65%.

The Cost of Debt of China Tonghai International Financial Ltd (952.HK) is 5.55%.

	Range	Selected
Cost of equity	7.30% - 10.00%	8.65%
Tax rate	2.20% - 5.20%	3.70%
Cost of debt	4.10% - 7.00%	5.55%
WACC	6.1% - 8.7%	7.4%

WACC

952.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.74	0.88

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.30%	10.00%

Tax rate	2.20%	5.20%
Debt/Equity ratio	0.6	0.6
Cost of debt	4.10%	7.00%

After-tax WACC	6.1%	8.7%


Selected WACC	7.4%

952.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 952.HK:

cost_of_equity (8.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.74) + 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.