2018.HK WACC - Weighted Average Cost of Capital

The WACC of AAC Technologies Holdings Inc (2018.HK) is 9.9%.

The Cost of Equity of AAC Technologies Holdings Inc (2018.HK) is 11.05%.

The Cost of Debt of AAC Technologies Holdings Inc (2018.HK) is 4.25%.

	Range	Selected
Cost of equity	9.60% - 12.50%	11.05%
Tax rate	10.40% - 17.60%	14.00%
Cost of debt	4.00% - 4.50%	4.25%
WACC	8.7% - 11.1%	9.9%

WACC

2018.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.13	1.24

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.60%	12.50%

Tax rate	10.40%	17.60%
Debt/Equity ratio	0.18	0.18
Cost of debt	4.00%	4.50%

After-tax WACC	8.7%	11.1%


Selected WACC	9.9%

2018.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 2018.HK:

cost_of_equity (11.05%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.13) + 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.