2788.HK WACC - Weighted Average Cost of Capital

The WACC of Yorkey Optical International (Cayman) Ltd (2788.HK) is 6.8%.

The Cost of Equity of Yorkey Optical International (Cayman) Ltd (2788.HK) is 6.85%.

The Cost of Debt of Yorkey Optical International (Cayman) Ltd (2788.HK) is 4.25%.

	Range	Selected
Cost of equity	5.80% - 7.90%	6.85%
Tax rate	14.40% - 19.40%	16.90%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.8% - 7.9%	6.8%

WACC

2788.HK WACC calculation

Category	Low	High

Long-term bond rate	3.0%	3.5%
Equity market risk premium	5.3%	6.3%
Adjusted beta	0.51	0.61

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.80%	7.90%

Tax rate	14.40%	19.40%
Debt/Equity ratio	0.01	0.01
Cost of debt	4.00%	4.50%

After-tax WACC	5.8%	7.9%


Selected WACC	6.8%

2788.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 2788.HK:

cost_of_equity (6.85%) = risk_free_rate (3.25%) + equity_risk_premium (5.80%) * adjusted_beta (0.51) + 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.