2678.HK WACC - Weighted Average Cost of Capital

The WACC of Texhong Textile Group Ltd (2678.HK) is 6.7%.

The Cost of Equity of Texhong Textile Group Ltd (2678.HK) is 10.15%.

The Cost of Debt of Texhong Textile Group Ltd (2678.HK) is 4.75%.

	Range	Selected
Cost of equity	8.00% - 12.30%	10.15%
Tax rate	19.40% - 21.80%	20.60%
Cost of debt	4.60% - 4.90%	4.75%
WACC	5.7% - 7.8%	6.7%

WACC

2678.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.86	1.21

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.00%	12.30%

Tax rate	19.40%	21.80%
Debt/Equity ratio	1.15	1.15
Cost of debt	4.60%	4.90%

After-tax WACC	5.7%	7.8%


Selected WACC	6.7%

2678.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 2678.HK:

cost_of_equity (10.15%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.86) + 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.