120.HK WACC - Weighted Average Cost of Capital

The WACC of Cosmopolitan International Holdings Ltd (120.HK) is 5.0%.

The Cost of Equity of Cosmopolitan International Holdings Ltd (120.HK) is 17.15%.

The Cost of Debt of Cosmopolitan International Holdings Ltd (120.HK) is 5.60%.

	Range	Selected
Cost of equity	11.60% - 22.70%	17.15%
Tax rate	19.50% - 49.10%	34.30%
Cost of debt	4.20% - 7.00%	5.60%
WACC	4.3% - 5.6%	5.0%

WACC

120.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.45	2.7

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.60%	22.70%

Tax rate	19.50%	49.10%
Debt/Equity ratio	8.29	8.29
Cost of debt	4.20%	7.00%

After-tax WACC	4.3%	5.6%


Selected WACC	5.0%

120.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 120.HK:

cost_of_equity (17.15%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.45) + 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.