114.HK WACC - Weighted Average Cost of Capital

The WACC of Herald Holdings Ltd (114.HK) is 5.7%.

The Cost of Equity of Herald Holdings Ltd (114.HK) is 5.70%.

The Cost of Debt of Herald Holdings Ltd (114.HK) is 6.20%.

	Range	Selected
Cost of equity	4.90% - 6.50%	5.70%
Tax rate	15.90% - 22.10%	19.00%
Cost of debt	4.00% - 8.40%	6.20%
WACC	4.9% - 6.5%	5.7%

WACC

114.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.34	0.37

Additional risk adjustments	0.0%	0.5%
Cost of equity	4.90%	6.50%

Tax rate	15.90%	22.10%
Debt/Equity ratio	0.04	0.04
Cost of debt	4.00%	8.40%

After-tax WACC	4.9%	6.5%


Selected WACC	5.7%

114.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 114.HK:

cost_of_equity (5.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.34) + 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.