The WACC of Huisen Household International Group Ltd (2127.HK) is 7.4%.
| Range | Selected | |
| Cost of equity | 20.00% - 42.00% | 31.00% |
| Tax rate | 14.40% - 14.80% | 14.60% |
| Cost of debt | 4.80% - 7.00% | 5.90% |
| WACC | 5.5% - 9.2% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 2.86 | 5.46 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 20.00% | 42.00% |
| Tax rate | 14.40% | 14.80% |
| Debt/Equity ratio | 10.05 | 10.05 |
| Cost of debt | 4.80% | 7.00% |
| After-tax WACC | 5.5% | 9.2% |
| Selected WACC | 7.4% | |
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 2127.HK:
cost_of_equity (31.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (2.86) + 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.