118.HK WACC - Weighted Average Cost of Capital

The WACC of Cosmos Machinery Enterprises Ltd (118.HK) is 5.2%.

The Cost of Equity of Cosmos Machinery Enterprises Ltd (118.HK) is 6.30%.

The Cost of Debt of Cosmos Machinery Enterprises Ltd (118.HK) is 5.80%.

	Range	Selected
Cost of equity	5.50% - 7.10%	6.30%
Tax rate	34.20% - 40.70%	37.45%
Cost of debt	5.10% - 6.50%	5.80%
WACC	4.7% - 5.8%	5.2%

WACC

118.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.44	0.46

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.50%	7.10%

Tax rate	34.20%	40.70%
Debt/Equity ratio	0.63	0.63
Cost of debt	5.10%	6.50%

After-tax WACC	4.7%	5.8%


Selected WACC	5.2%

118.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 118.HK:

cost_of_equity (6.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.44) + 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.