1896.HK WACC - Weighted Average Cost of Capital

The WACC of Maoyan Entertainment (1896.HK) is 10.9%.

The Cost of Equity of Maoyan Entertainment (1896.HK) is 11.40%.

The Cost of Debt of Maoyan Entertainment (1896.HK) is 4.25%.

	Range	Selected
Cost of equity	9.90% - 12.90%	11.40%
Tax rate	27.20% - 34.50%	30.85%
Cost of debt	4.00% - 4.50%	4.25%
WACC	9.4% - 12.3%	10.9%

WACC

1896.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.17	1.29

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.90%	12.90%

Tax rate	27.20%	34.50%
Debt/Equity ratio	0.06	0.06
Cost of debt	4.00%	4.50%

After-tax WACC	9.4%	12.3%


Selected WACC	10.9%

1896.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 1896.HK:

cost_of_equity (11.40%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.17) + 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.