000709.SZ WACC - Weighted Average Cost of Capital

The WACC of HBIS Co Ltd (000709.SZ) is 7.5%.

The Cost of Equity of HBIS Co Ltd (000709.SZ) is 26.60%.

The Cost of Debt of HBIS Co Ltd (000709.SZ) is 5.00%.

	Range	Selected
Cost of equity	18.60% - 34.60%	26.60%
Tax rate	12.70% - 14.40%	13.55%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.4% - 8.5%	7.5%

WACC

000709.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	2.6	4.34

Additional risk adjustments	0.0%	0.5%
Cost of equity	18.60%	34.60%

Tax rate	12.70%	14.40%
Debt/Equity ratio	6.12	6.12
Cost of debt	5.00%	5.00%

After-tax WACC	6.4%	8.5%


Selected WACC	7.5%

000709.SZ'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 000709.SZ:

cost_of_equity (26.60%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (2.6) + 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.