The WACC of Weihai City Commercial Bank Co Ltd (9677.HK) is 5.4%.
| Range | Selected | |
| Cost of equity | 8.40% - 11.50% | 9.95% |
| Tax rate | 10.40% - 13.20% | 11.80% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.2% - 5.6% | 5.4% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.93 | 1.09 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.40% | 11.50% |
| Tax rate | 10.40% | 13.20% |
| Debt/Equity ratio | 4.53 | 4.53 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.2% | 5.6% |
| Selected WACC | 5.4% | |
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 9677.HK:
cost_of_equity (9.95%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.93) + 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.