978.HK WACC - Weighted Average Cost of Capital

The WACC of China Merchants Land Ltd (978.HK) is 11.2%.

The Cost of Equity of China Merchants Land Ltd (978.HK) is 32.85%.

The Cost of Debt of China Merchants Land Ltd (978.HK) is 13.65%.

	Range	Selected
Cost of equity	23.80% - 41.90%	32.85%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	4.40% - 22.90%	13.65%
WACC	4.0% - 18.4%	11.2%

WACC

978.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	3.51	5.45

Additional risk adjustments	0.0%	0.5%
Cost of equity	23.80%	41.90%

Tax rate	22.10%	22.30%
Debt/Equity ratio	36.08	36.08
Cost of debt	4.40%	22.90%

After-tax WACC	4.0%	18.4%


Selected WACC	11.2%

978.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 978.HK:

cost_of_equity (32.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (3.51) + 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.