The WACC of Kwoon Chung Bus Holdings Ltd (306.HK) is 7.0%.
Range | Selected | |
Cost of equity | 8.2% - 14.3% | 11.25% |
Tax rate | 6.0% - 14.4% | 10.2% |
Cost of debt | 4.0% - 6.5% | 5.25% |
WACC | 5.3% - 8.6% | 7.0% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.89 | 1.49 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.2% | 14.3% |
Tax rate | 6.0% | 14.4% |
Debt/Equity ratio | 1.87 | 1.87 |
Cost of debt | 4.0% | 6.5% |
After-tax WACC | 5.3% | 8.6% |
Selected WACC | 7.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
306.HK | Kwoon Chung Bus Holdings Ltd | 1.87 | 0.23 | 0.08 |
002357.SZ | Sichuan Fulin Transportation Group Co Ltd | 0.18 | 0.94 | 0.81 |
024800.KQ | Yoosung T&S Co Ltd | 0.67 | 0.61 | 0.37 |
4110.SR | Batic Investments and Logistics Co | 0.66 | 1.98 | 1.24 |
603813.SS | GuangDong Gensho Logistics Co Ltd | 0.37 | 1.18 | 0.88 |
62.HK | Transport International Holdings Ltd | 0.91 | 0.16 | 0.09 |
77.HK | Ams Public Transport Holdings Ltd | 1.7 | 0.38 | 0.15 |
9057.T | Enshu Truck Co Ltd | 0.4 | 0.29 | 0.21 |
LAU.AX | Lindsay Australia Ltd | 0.94 | 0.98 | 0.52 |
VRLLOG.NS | VRL Logistics Ltd | 0.22 | 1.08 | 0.9 |
Low | High | |
Unlevered beta | 0.31 | 0.64 |
Relevered beta | 0.84 | 1.73 |
Adjusted relevered beta | 0.89 | 1.49 |
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 306.HK:
cost_of_equity (11.25%) = 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.