The WACC of Innovax Holdings Ltd (2680.HK) is 6.7%.
| Range | Selected | |
| Cost of equity | 5.40% - 8.10% | 6.75% |
| Tax rate | 3.40% - 5.70% | 4.55% |
| Cost of debt | 4.00% - 15.40% | 9.70% |
| WACC | 5.4% - 8.1% | 6.7% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.34 | 0.53 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 5.40% | 8.10% |
| Tax rate | 3.40% | 5.70% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 4.00% | 15.40% |
| After-tax WACC | 5.4% | 8.1% |
| Selected WACC | 6.7% | |
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 2680.HK:
cost_of_equity (6.75%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.34) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.