The WACC of Nanjing Sample Technology Co Ltd (1708.HK) is 8.8%.
| Range | Selected | |
| Cost of equity | 14.00% - 27.80% | 20.90% |
| Tax rate | 1.90% - 5.10% | 3.50% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 7.1% - 10.4% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.85 | 3.42 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 14.00% | 27.80% |
| Tax rate | 1.90% | 5.10% |
| Debt/Equity ratio | 3.05 | 3.05 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 7.1% | 10.4% |
| Selected WACC | 8.8% | |
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 1708.HK:
cost_of_equity (20.90%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.85) + 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.