1825.HK WACC - Weighted Average Cost of Capital

The WACC of Sterling Group Holdings Ltd (1825.HK) is 9.6%.

The Cost of Equity of Sterling Group Holdings Ltd (1825.HK) is 13.15%.

The Cost of Debt of Sterling Group Holdings Ltd (1825.HK) is 9.30%.

	Range	Selected
Cost of equity	9.30% - 17.00%	13.15%
Tax rate	5.00% - 9.30%	7.15%
Cost of debt	4.00% - 14.60%	9.30%
WACC	5.1% - 14.2%	9.6%

WACC

1825.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.08	1.88

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.30%	17.00%

Tax rate	5.00%	9.30%
Debt/Equity ratio	3.16	3.16
Cost of debt	4.00%	14.60%

After-tax WACC	5.1%	14.2%


Selected WACC	9.6%

1825.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 1825.HK:

cost_of_equity (13.15%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.08) + 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.