334.HK WACC - Weighted Average Cost of Capital

The WACC of China Display Optoelectronics Technology Holdings Ltd (334.HK) is 8.6%.

The Cost of Equity of China Display Optoelectronics Technology Holdings Ltd (334.HK) is 8.70%.

The Cost of Debt of China Display Optoelectronics Technology Holdings Ltd (334.HK) is 4.25%.

	Range	Selected
Cost of equity	7.00% - 10.40%	8.70%
Tax rate	15.50% - 26.00%	20.75%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.9% - 10.4%	8.6%

WACC

334.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.69	0.94

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.00%	10.40%

Tax rate	15.50%	26.00%
Debt/Equity ratio	0.01	0.01
Cost of debt	4.00%	4.50%

After-tax WACC	6.9%	10.4%


Selected WACC	8.6%

334.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 334.HK:

cost_of_equity (8.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.69) + 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.