2221.HK WACC - Weighted Average Cost of Capital

The WACC of New Concepts Holdings Ltd (2221.HK) is 7.0%.

The Cost of Equity of New Concepts Holdings Ltd (2221.HK) is 7.95%.

The Cost of Debt of New Concepts Holdings Ltd (2221.HK) is 7.50%.

	Range	Selected
Cost of equity	5.70% - 10.20%	7.95%
Tax rate	9.50% - 18.50%	14.00%
Cost of debt	7.00% - 8.00%	7.50%
WACC	6.1% - 7.9%	7.0%

WACC

2221.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.47	0.91

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.70%	10.20%

Tax rate	9.50%	18.50%
Debt/Equity ratio	1.72	1.72
Cost of debt	7.00%	8.00%

After-tax WACC	6.1%	7.9%


Selected WACC	7.0%

2221.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 2221.HK:

cost_of_equity (7.95%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.47) + 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.