954.HK WACC - Weighted Average Cost of Capital

The WACC of Changmao Biochemical Engineering Co Ltd (954.HK) is 8.3%.

The Cost of Equity of Changmao Biochemical Engineering Co Ltd (954.HK) is 21.15%.

The Cost of Debt of Changmao Biochemical Engineering Co Ltd (954.HK) is 5.65%.

	Range	Selected
Cost of equity	16.30% - 26.00%	21.15%
Tax rate	5.30% - 16.70%	11.00%
Cost of debt	4.30% - 7.00%	5.65%
WACC	6.6% - 10.0%	8.3%

WACC

954.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	2.25	3.17

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.30%	26.00%

Tax rate	5.30%	16.70%
Debt/Equity ratio	3.78	3.78
Cost of debt	4.30%	7.00%

After-tax WACC	6.6%	10.0%


Selected WACC	8.3%

954.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 954.HK:

cost_of_equity (21.15%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (2.25) + 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.