1939.HK WACC - Weighted Average Cost of Capital

The WACC of Tokyo Chuo Auction Holdings Ltd (1939.HK) is 6.1%.

The Cost of Equity of Tokyo Chuo Auction Holdings Ltd (1939.HK) is 6.30%.

The Cost of Debt of Tokyo Chuo Auction Holdings Ltd (1939.HK) is 5.50%.

	Range	Selected
Cost of equity	5.20% - 7.40%	6.30%
Tax rate	13.70% - 23.60%	18.65%
Cost of debt	4.00% - 7.00%	5.50%
WACC	5.1% - 7.2%	6.1%

WACC

1939.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.39	0.5

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.20%	7.40%

Tax rate	13.70%	23.60%
Debt/Equity ratio	0.08	0.08
Cost of debt	4.00%	7.00%

After-tax WACC	5.1%	7.2%


Selected WACC	6.1%

1939.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 1939.HK:

cost_of_equity (6.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.39) + 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.