2346.HK WACC - Weighted Average Cost of Capital

The WACC of Universal Star (Holdings) Ltd (2346.HK) is 9.9%.

The Cost of Equity of Universal Star (Holdings) Ltd (2346.HK) is 10.20%.

The Cost of Debt of Universal Star (Holdings) Ltd (2346.HK) is 6.35%.

	Range	Selected
Cost of equity	8.70% - 11.70%	10.20%
Tax rate	21.10% - 22.20%	21.65%
Cost of debt	5.70% - 7.00%	6.35%
WACC	8.5% - 11.3%	9.9%

WACC

2346.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.98	1.12

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.70%	11.70%

Tax rate	21.10%	22.20%
Debt/Equity ratio	0.07	0.07
Cost of debt	5.70%	7.00%

After-tax WACC	8.5%	11.3%


Selected WACC	9.9%

2346.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 2346.HK:

cost_of_equity (10.20%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.98) + 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.