1870.HK WACC - Weighted Average Cost of Capital

The WACC of Acme International Holdings Ltd (1870.HK) is 6.4%.

The Cost of Equity of Acme International Holdings Ltd (1870.HK) is 6.50%.

The Cost of Debt of Acme International Holdings Ltd (1870.HK) is 8.30%.

	Range	Selected
Cost of equity	5.50% - 7.50%	6.50%
Tax rate	22.50% - 24.80%	23.65%
Cost of debt	4.60% - 12.00%	8.30%
WACC	5.0% - 7.9%	6.4%

WACC

1870.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	0.52

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.50%	7.50%

Tax rate	22.50%	24.80%
Debt/Equity ratio	0.33	0.33
Cost of debt	4.60%	12.00%

After-tax WACC	5.0%	7.9%


Selected WACC	6.4%

1870.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 1870.HK:

cost_of_equity (6.50%) = 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.