2869.HK WACC - Weighted Average Cost of Capital

The WACC of Greentown Service Group Co Ltd (2869.HK) is 8.5%.

The Cost of Equity of Greentown Service Group Co Ltd (2869.HK) is 8.65%.

The Cost of Debt of Greentown Service Group Co Ltd (2869.HK) is 5.25%.

	Range	Selected
Cost of equity	7.50% - 9.80%	8.65%
Tax rate	26.70% - 28.10%	27.40%
Cost of debt	4.00% - 6.50%	5.25%
WACC	7.4% - 9.6%	8.5%

WACC

2869.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.78	0.85

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.50%	9.80%

Tax rate	26.70%	28.10%
Debt/Equity ratio	0.04	0.04
Cost of debt	4.00%	6.50%

After-tax WACC	7.4%	9.6%


Selected WACC	8.5%

2869.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 2869.HK:

cost_of_equity (8.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.78) + 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.