310.HK WACC - Weighted Average Cost of Capital

The WACC of Prosperity Investment Holdings Ltd (310.HK) is 6.3%.

The Cost of Equity of Prosperity Investment Holdings Ltd (310.HK) is 6.70%.

The Cost of Debt of Prosperity Investment Holdings Ltd (310.HK) is 7.20%.

	Range	Selected
Cost of equity	5.50% - 7.90%	6.70%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	7.00% - 7.40%	7.20%
WACC	5.5% - 7.1%	6.3%

WACC

310.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.35	0.51

Additional risk adjustments	0.5%	1.0%
Cost of equity	5.50%	7.90%

Tax rate	22.10%	22.30%
Debt/Equity ratio	0.67	0.67
Cost of debt	7.00%	7.40%

After-tax WACC	5.5%	7.1%


Selected WACC	6.3%

310.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 310.HK:

cost_of_equity (6.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.35) + 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.