2398.HK WACC - Weighted Average Cost of Capital

The WACC of Good Friend International Holdings Inc (2398.HK) is 6.8%.

The Cost of Equity of Good Friend International Holdings Inc (2398.HK) is 9.25%.

The Cost of Debt of Good Friend International Holdings Inc (2398.HK) is 5.95%.

	Range	Selected
Cost of equity	6.90% - 11.60%	9.25%
Tax rate	27.50% - 32.50%	30.00%
Cost of debt	4.00% - 7.90%	5.95%
WACC	5.0% - 8.6%	6.8%

WACC

2398.HK WACC calculation

Category	Low	High

Long-term bond rate	3.0%	3.5%
Equity market risk premium	5.3%	6.3%
Adjusted beta	0.72	1.19

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	11.60%

Tax rate	27.50%	32.50%
Debt/Equity ratio	0.91	0.91
Cost of debt	4.00%	7.90%

After-tax WACC	5.0%	8.6%


Selected WACC	6.8%

2398.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 2398.HK:

cost_of_equity (9.25%) = risk_free_rate (3.25%) + equity_risk_premium (5.80%) * adjusted_beta (0.72) + 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.