The WACC of China Taiping Insurance Holdings Co Ltd (966.HK) is 8.3%.
Range | Selected | |
Cost of equity | 12.8% - 17.2% | 15% |
Tax rate | 17.4% - 27.4% | 22.4% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.6% - 9.1% | 8.3% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 1.65 | 1.91 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 12.8% | 17.2% |
Tax rate | 17.4% | 27.4% |
Debt/Equity ratio | 1.49 | 1.49 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.6% | 9.1% |
Selected WACC | 8.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
966.HK | China Taiping Insurance Holdings Co Ltd | 1.49 | 1.46 | 0.67 |
000627.SZ | Hubei Biocause Pharmaceutical Co Ltd | 0.62 | 1.87 | 1.25 |
1299.HK | AIA Group Ltd | 0.15 | 1.19 | 1.07 |
2881.TW | Fubon Financial Holding Co Ltd | 0.54 | 0.85 | 0.6 |
2882.TW | Cathay Financial Holding Co Ltd | 0.59 | 0.04 | 0.03 |
2888.TW | Shin Kong Financial Holding Co Ltd | 0.83 | 0.13 | 0.08 |
376.HK | Yunfeng Financial Group Ltd | 0.22 | 1.33 | 1.13 |
601336.SS | New China Life Insurance Co Ltd | 0.16 | 1.83 | 1.62 |
8795.T | T&D Holdings Inc | 0.07 | 1.16 | 1.1 |
ICICIPRULI.NS | ICICI Prudential Life Insurance Company Ltd | 0.03 | 1.09 | 1.07 |
Low | High | |
Unlevered beta | 0.91 | 1.08 |
Relevered beta | 1.97 | 2.36 |
Adjusted relevered beta | 1.65 | 1.91 |
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 966.HK:
cost_of_equity (15.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.65) + 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.