The WACC of China Outfitters Holdings Ltd (1146.HK) is 6.3%.
Range | Selected | |
Cost of equity | 5.3% - 7.6% | 6.45% |
Tax rate | 25.9% - 28.2% | 27.05% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.2% - 7.4% | 6.3% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.41 | 0.53 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.3% | 7.6% |
Tax rate | 25.9% | 28.2% |
Debt/Equity ratio | 0.04 | 0.04 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.2% | 7.4% |
Selected WACC | 6.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
1146.HK | China Outfitters Holdings Ltd | 0.04 | 0.33 | 0.32 |
1027.HK | China Jicheng Holdings Ltd | 0.28 | -0.1 | -0.09 |
1247.HK | Miko International Holdings Ltd | 0.05 | -0.57 | -0.55 |
1425.HK | Justin Allen Holdings Ltd | 0.03 | 0.1 | 0.1 |
1532.HK | China Partytime Culture Holdings Ltd | 0.15 | 0.14 | 0.12 |
540.HK | Speedy Global Holdings Ltd | 0.87 | 1.71 | 1.04 |
600146.SS | Shangying Global Co Ltd | 2.51 | 1.4 | 0.49 |
603196.SS | Ribo Fashion Group Co Ltd | 0.04 | 1.87 | 1.82 |
837.HK | Carpenter Tan Holdings Ltd | 0.01 | 0.28 | 0.28 |
8471.HK | Reach New Holdings Ltd | 0.02 | -0.37 | -0.37 |
Low | High | |
Unlevered beta | 0.11 | 0.29 |
Relevered beta | 0.12 | 0.3 |
Adjusted relevered beta | 0.41 | 0.53 |
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 1146.HK:
cost_of_equity (6.45%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.41) + 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.