2258.HK WACC - Weighted Average Cost of Capital

The WACC of Watts International Maritime Engineering Ltd (2258.HK) is 8.0%.

The Cost of Equity of Watts International Maritime Engineering Ltd (2258.HK) is 14.30%.

The Cost of Debt of Watts International Maritime Engineering Ltd (2258.HK) is 6.35%.

	Range	Selected
Cost of equity	11.50% - 17.10%	14.30%
Tax rate	19.90% - 25.30%	22.60%
Cost of debt	5.70% - 7.00%	6.35%
WACC	6.8% - 9.1%	8.0%

WACC

2258.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.44	1.89

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.50%	17.10%

Tax rate	19.90%	25.30%
Debt/Equity ratio	2.05	2.05
Cost of debt	5.70%	7.00%

After-tax WACC	6.8%	9.1%


Selected WACC	8.0%

2258.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 2258.HK:

cost_of_equity (14.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.44) + 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.