1986.HK WACC - Weighted Average Cost of Capital

The WACC of Tsaker Chemical Group Ltd (1986.HK) is 8.5%.

The Cost of Equity of Tsaker Chemical Group Ltd (1986.HK) is 9.95%.

The Cost of Debt of Tsaker Chemical Group Ltd (1986.HK) is 5.20%.

	Range	Selected
Cost of equity	8.00% - 11.90%	9.95%
Tax rate	24.10% - 25.00%	24.55%
Cost of debt	4.60% - 5.80%	5.20%
WACC	6.9% - 10.0%	8.5%

WACC

1986.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.86	1.15

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.00%	11.90%

Tax rate	24.10%	25.00%
Debt/Equity ratio	0.34	0.34
Cost of debt	4.60%	5.80%

After-tax WACC	6.9%	10.0%


Selected WACC	8.5%

1986.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 1986.HK:

cost_of_equity (9.95%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.86) + 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.