2018.HK WACC - Weighted Average Cost of Capital

The WACC of AAC Technologies Holdings Inc (2018.HK) is 10.4%.

The Cost of Equity of AAC Technologies Holdings Inc (2018.HK) is 12.00%.

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

	Range	Selected
Cost of equity	10.40% - 13.60%	12.00%
Tax rate	11.80% - 18.00%	14.90%
Cost of debt	4.00% - 4.50%	4.25%
WACC	9.1% - 11.7%	10.4%

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	1.26	1.39

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.40%	13.60%

Tax rate	11.80%	18.00%
Debt/Equity ratio	0.24	0.24
Cost of debt	4.00%	4.50%

After-tax WACC	9.1%	11.7%


Selected WACC	10.4%

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 (12.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.26) + 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.