1397.HK WACC - Weighted Average Cost of Capital

The WACC of Baguio Green Group Ltd (1397.HK) is 7.5%.

The Cost of Equity of Baguio Green Group Ltd (1397.HK) is 8.65%.

The Cost of Debt of Baguio Green Group Ltd (1397.HK) is 4.35%.

	Range	Selected
Cost of equity	6.70% - 10.60%	8.65%
Tax rate	18.70% - 21.90%	20.30%
Cost of debt	4.00% - 4.70%	4.35%
WACC	6.0% - 9.1%	7.5%

WACC

1397.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.64	0.96

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.70%	10.60%

Tax rate	18.70%	21.90%
Debt/Equity ratio	0.26	0.26
Cost of debt	4.00%	4.70%

After-tax WACC	6.0%	9.1%


Selected WACC	7.5%

1397.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 1397.HK:

cost_of_equity (8.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.64) + 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.