2189.HK WACC - Weighted Average Cost of Capital

The WACC of Kato Hong Kong Holdings Ltd (2189.HK) is 6.2%.

The Cost of Equity of Kato Hong Kong Holdings Ltd (2189.HK) is 8.35%.

The Cost of Debt of Kato Hong Kong Holdings Ltd (2189.HK) is 4.25%.

	Range	Selected
Cost of equity	6.20% - 10.50%	8.35%
Tax rate	15.40% - 16.50%	15.95%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.9% - 7.5%	6.2%

WACC

2189.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.56	0.96

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.20%	10.50%

Tax rate	15.40%	16.50%
Debt/Equity ratio	0.81	0.81
Cost of debt	4.00%	4.50%

After-tax WACC	4.9%	7.5%


Selected WACC	6.2%

2189.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 2189.HK:

cost_of_equity (8.35%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.56) + 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.