2678.HK WACC - Weighted Average Cost of Capital

The WACC of Texhong Textile Group Ltd (2678.HK) is 6.2%.

The Cost of Equity of Texhong Textile Group Ltd (2678.HK) is 10.50%.

The Cost of Debt of Texhong Textile Group Ltd (2678.HK) is 5.45%.

	Range	Selected
Cost of equity	8.20% - 12.80%	10.50%
Tax rate	20.40% - 22.90%	21.65%
Cost of debt	4.40% - 6.50%	5.45%
WACC	4.9% - 7.4%	6.2%

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	0.89	1.28

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.20%	12.80%

Tax rate	20.40%	22.90%
Debt/Equity ratio	2.25	2.25
Cost of debt	4.40%	6.50%

After-tax WACC	4.9%	7.4%


Selected WACC	6.2%

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 (10.50%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.89) + 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.