954.HK WACC - Weighted Average Cost of Capital

The WACC of Changmao Biochemical Engineering Co Ltd (954.HK) is 25.8%.

The Cost of Equity of Changmao Biochemical Engineering Co Ltd (954.HK) is 11.75%.

The Cost of Debt of Changmao Biochemical Engineering Co Ltd (954.HK) is 35.20%.

	Range	Selected
Cost of equity	7.20% - 16.30%	11.75%
Tax rate	5.30% - 16.70%	11.00%
Cost of debt	7.00% - 63.40%	35.20%
WACC	6.8% - 44.9%	25.8%

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	0.72	1.78

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.20%	16.30%

Tax rate	5.30%	16.70%
Debt/Equity ratio	3.63	3.63
Cost of debt	7.00%	63.40%

After-tax WACC	6.8%	44.9%


Selected WACC	25.8%

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 (11.75%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.72) + 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.