993.HK WACC - Weighted Average Cost of Capital

The WACC of Huarong International Financial Holdings Ltd (993.HK) is 8.2%.

The Cost of Equity of Huarong International Financial Holdings Ltd (993.HK) is 8.05%.

The Cost of Debt of Huarong International Financial Holdings Ltd (993.HK) is 8.40%.

	Range	Selected
Cost of equity	6.40% - 9.70%	8.05%
Tax rate	1.00% - 2.10%	1.55%
Cost of debt	7.00% - 9.80%	8.40%
WACC	6.8% - 9.6%	8.2%

WACC

993.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.6	0.84

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.40%	9.70%

Tax rate	1.00%	2.10%
Debt/Equity ratio	3.47	3.47
Cost of debt	7.00%	9.80%

After-tax WACC	6.8%	9.6%


Selected WACC	8.2%

993.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 993.HK:

cost_of_equity (8.05%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.6) + 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.