1721.HK
FSM Holdings Ltd
Price:  
0.45 
HKD
Volume:  
75,000
Singapore | Machinery

1721.HK WACC - Weighted Average Cost of Capital

The WACC of FSM Holdings Ltd (1721.HK) is 5.3%.

The Cost of Equity of FSM Holdings Ltd (1721.HK) is 5.45%.
The Cost of Debt of FSM Holdings Ltd (1721.HK) is 5.5%.

RangeSelected
Cost of equity4.3% - 6.6%5.45%
Tax rate17.8% - 20.3%19.05%
Cost of debt4.0% - 7.0%5.5%
WACC4.2% - 6.4%5.3%
WACC

1721.HK WACC calculation

CategoryLowHigh
Long-term bond rate2.9%3.4%
Equity market risk premium6.0%7.0%
Adjusted beta0.250.39
Additional risk adjustments0.0%0.5%
Cost of equity4.3%6.6%
Tax rate17.8%20.3%
Debt/Equity ratio
0.20.2
Cost of debt4.0%7.0%
After-tax WACC4.2%6.4%
Selected WACC5.3%

1721.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 1721.HK:

cost_of_equity (5.45%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.25) + 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.