1566.HK WACC - Weighted Average Cost of Capital

The WACC of CA Cultural Technology Group Ltd (1566.HK) is 6.6%.

The Cost of Equity of CA Cultural Technology Group Ltd (1566.HK) is 14.00%.

The Cost of Debt of CA Cultural Technology Group Ltd (1566.HK) is 6.45%.

	Range	Selected
Cost of equity	11.20% - 16.80%	14.00%
Tax rate	2.10% - 4.80%	3.45%
Cost of debt	5.90% - 7.00%	6.45%
WACC	6.0% - 7.2%	6.6%

WACC

1566.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.39	1.85

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.20%	16.80%

Tax rate	2.10%	4.80%
Debt/Equity ratio	17.71	17.71
Cost of debt	5.90%	7.00%

After-tax WACC	6.0%	7.2%


Selected WACC	6.6%

1566.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 1566.HK:

cost_of_equity (14.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.39) + 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.