2698.HK WACC - Weighted Average Cost of Capital

The WACC of Weiqiao Textile Co Ltd (2698.HK) is 7.3%.

The Cost of Equity of Weiqiao Textile Co Ltd (2698.HK) is 11.70%.

The Cost of Debt of Weiqiao Textile Co Ltd (2698.HK) is 6.05%.

	Range	Selected
Cost of equity	9.50% - 13.90%	11.70%
Tax rate	24.90% - 45.00%	34.95%
Cost of debt	5.10% - 7.00%	6.05%
WACC	6.3% - 8.3%	7.3%

WACC

2698.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.1	1.44

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.50%	13.90%

Tax rate	24.90%	45.00%
Debt/Equity ratio	1.27	1.27
Cost of debt	5.10%	7.00%

After-tax WACC	6.3%	8.3%


Selected WACC	7.3%

2698.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 2698.HK:

cost_of_equity (11.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.1) + 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.