1825.HK WACC - Weighted Average Cost of Capital

The WACC of Sterling Group Holdings Ltd (1825.HK) is 10.4%.

The Cost of Equity of Sterling Group Holdings Ltd (1825.HK) is 6.85%.

The Cost of Debt of Sterling Group Holdings Ltd (1825.HK) is 11.95%.

	Range	Selected
Cost of equity	5.90% - 7.80%	6.85%
Tax rate	5.00% - 9.30%	7.15%
Cost of debt	4.00% - 19.90%	11.95%
WACC	4.0% - 16.8%	10.4%

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	0.5	0.56

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.90%	7.80%

Tax rate	5.00%	9.30%
Debt/Equity ratio	7.2	7.2
Cost of debt	4.00%	19.90%

After-tax WACC	4.0%	16.8%


Selected WACC	10.4%

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 (6.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.5) + 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.