1039.HK WACC - Weighted Average Cost of Capital

The WACC of Changyou Alliance Group Ltd (1039.HK) is 11.7%.

The Cost of Equity of Changyou Alliance Group Ltd (1039.HK) is 14.10%.

The Cost of Debt of Changyou Alliance Group Ltd (1039.HK) is 13.70%.

	Range	Selected
Cost of equity	8.40% - 19.80%	14.10%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	4.50% - 22.90%	13.70%
WACC	5.0% - 18.4%	11.7%

WACC

1039.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.92	2.28

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.40%	19.80%

Tax rate	22.10%	22.30%
Debt/Equity ratio	2.27	2.27
Cost of debt	4.50%	22.90%

After-tax WACC	5.0%	18.4%


Selected WACC	11.7%

1039.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 1039.HK:

cost_of_equity (14.10%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.92) + 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.