2017.HK WACC - Weighted Average Cost of Capital

The WACC of Chanhigh Holdings Ltd (2017.HK) is 5.9%.

The Cost of Equity of Chanhigh Holdings Ltd (2017.HK) is 10.85%.

The Cost of Debt of Chanhigh Holdings Ltd (2017.HK) is 6.25%.

	Range	Selected
Cost of equity	8.10% - 13.60%	10.85%
Tax rate	24.70% - 26.90%	25.80%
Cost of debt	4.40% - 8.10%	6.25%
WACC	4.3% - 7.5%	5.9%

WACC

2017.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.87	1.4

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.10%	13.60%

Tax rate	24.70%	26.90%
Debt/Equity ratio	3.85	3.85
Cost of debt	4.40%	8.10%

After-tax WACC	4.3%	7.5%


Selected WACC	5.9%

2017.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 2017.HK:

cost_of_equity (10.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.87) + 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.