1868.HK WACC - Weighted Average Cost of Capital

The WACC of Neo-Neon Holdings Ltd (1868.HK) is 6.4%.

The Cost of Equity of Neo-Neon Holdings Ltd (1868.HK) is 6.60%.

The Cost of Debt of Neo-Neon Holdings Ltd (1868.HK) is 4.25%.

	Range	Selected
Cost of equity	5.50% - 7.70%	6.60%
Tax rate	28.30% - 37.70%	33.00%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.3% - 7.4%	6.4%

WACC

1868.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.44	0.54

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.50%	7.70%

Tax rate	28.30%	37.70%
Debt/Equity ratio	0.07	0.07
Cost of debt	4.00%	4.50%

After-tax WACC	5.3%	7.4%


Selected WACC	6.4%

1868.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 1868.HK:

cost_of_equity (6.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.44) + 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.