1046.HK WACC - Weighted Average Cost of Capital

The WACC of Universe Entertainment and Culture Group Company Ltd (1046.HK) is 6.1%.

The Cost of Equity of Universe Entertainment and Culture Group Company Ltd (1046.HK) is 6.15%.

The Cost of Debt of Universe Entertainment and Culture Group Company Ltd (1046.HK) is 5.50%.

	Range	Selected
Cost of equity	5.40% - 6.90%	6.15%
Tax rate	3.70% - 9.00%	6.35%
Cost of debt	4.00% - 7.00%	5.50%
WACC	5.3% - 6.9%	6.1%

WACC

1046.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.33	0.36

Additional risk adjustments	0.5%	1.0%
Cost of equity	5.40%	6.90%

Tax rate	3.70%	9.00%
Debt/Equity ratio	0.04	0.04
Cost of debt	4.00%	7.00%

After-tax WACC	5.3%	6.9%


Selected WACC	6.1%

1046.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 1046.HK:

cost_of_equity (6.15%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.33) + risk_adjustments (0.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.