1856.HK WACC - Weighted Average Cost of Capital

The WACC of Ernest Borel Holdings Ltd (1856.HK) is 7.4%.

The Cost of Equity of Ernest Borel Holdings Ltd (1856.HK) is 6.00%.

The Cost of Debt of Ernest Borel Holdings Ltd (1856.HK) is 9.55%.

	Range	Selected
Cost of equity	5.20% - 6.80%	6.00%
Tax rate	2.00% - 4.90%	3.45%
Cost of debt	7.00% - 12.10%	9.55%
WACC	5.9% - 8.8%	7.4%

WACC

1856.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.31	0.35

Additional risk adjustments	0.5%	1.0%
Cost of equity	5.20%	6.80%

Tax rate	2.00%	4.90%
Debt/Equity ratio	0.73	0.73
Cost of debt	7.00%	12.10%

After-tax WACC	5.9%	8.8%


Selected WACC	7.4%

1856.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 1856.HK:

cost_of_equity (6.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.31) + risk_adjustments (0.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.