2153.HK WACC - Weighted Average Cost of Capital

The WACC of Tat Hong Equipment Service Co Ltd (2153.HK) is 7.4%.

The Cost of Equity of Tat Hong Equipment Service Co Ltd (2153.HK) is 9.60%.

The Cost of Debt of Tat Hong Equipment Service Co Ltd (2153.HK) is 5.85%.

	Range	Selected
Cost of equity	7.20% - 12.00%	9.60%
Tax rate	7.10% - 15.80%	11.45%
Cost of debt	4.70% - 7.00%	5.85%
WACC	5.8% - 8.9%	7.4%

WACC

2153.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.73	1.17

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.20%	12.00%

Tax rate	7.10%	15.80%
Debt/Equity ratio	1.01	1.01
Cost of debt	4.70%	7.00%

After-tax WACC	5.8%	8.9%


Selected WACC	7.4%

2153.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 2153.HK:

cost_of_equity (9.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.73) + 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.