354.HK WACC - Weighted Average Cost of Capital

The WACC of Chinasoft International Ltd (354.HK) is 10.6%.

The Cost of Equity of Chinasoft International Ltd (354.HK) is 12.70%.

The Cost of Debt of Chinasoft International Ltd (354.HK) is 4.60%.

	Range	Selected
Cost of equity	10.60% - 14.80%	12.70%
Tax rate	8.50% - 8.80%	8.65%
Cost of debt	4.10% - 5.10%	4.60%
WACC	8.9% - 12.3%	10.6%

WACC

354.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.29	1.57

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.60%	14.80%

Tax rate	8.50%	8.80%
Debt/Equity ratio	0.33	0.33
Cost of debt	4.10%	5.10%

After-tax WACC	8.9%	12.3%


Selected WACC	10.6%

354.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 354.HK:

cost_of_equity (12.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.29) + 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.