The WACC of Century City International Holdings Ltd (355.HK) is 4.9%.
Range | Selected | |
Cost of equity | 11.80% - 22.80% | 17.30% |
Tax rate | 2.20% - 17.90% | 10.05% |
Cost of debt | 4.00% - 7.00% | 5.50% |
WACC | 4.0% - 5.9% | 4.9% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 1.49 | 2.71 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 11.80% | 22.80% |
Tax rate | 2.20% | 17.90% |
Debt/Equity ratio | 142.05 | 142.05 |
Cost of debt | 4.00% | 7.00% |
After-tax WACC | 4.0% | 5.9% |
Selected WACC | 4.9% | |
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 355.HK:
cost_of_equity (17.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.49) + 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.