The WACC of Greentech Technology International Ltd (195.HK) is 10.5%.
| Range | Selected | |
| Cost of equity | 9.60% - 12.50% | 11.05% |
| Tax rate | 32.60% - 38.00% | 35.30% |
| Cost of debt | 4.00% - 16.00% | 10.00% |
| WACC | 8.8% - 12.2% | 10.5% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.12 | 1.23 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.60% | 12.50% |
| Tax rate | 32.60% | 38.00% |
| Debt/Equity ratio | 0.12 | 0.12 |
| Cost of debt | 4.00% | 16.00% |
| After-tax WACC | 8.8% | 12.2% |
| Selected WACC | 10.5% | |
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 195.HK:
cost_of_equity (11.05%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.12) + 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.