3608.HK WACC - Weighted Average Cost of Capital

The WACC of Yongsheng Advanced Materials Company Ltd (3608.HK) is 5.9%.

The Cost of Equity of Yongsheng Advanced Materials Company Ltd (3608.HK) is 6.45%.

The Cost of Debt of Yongsheng Advanced Materials Company Ltd (3608.HK) is 5.30%.

	Range	Selected
Cost of equity	5.50% - 7.40%	6.45%
Tax rate	18.20% - 20.20%	19.20%
Cost of debt	4.60% - 6.00%	5.30%
WACC	5.1% - 6.8%	5.9%

WACC

3608.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	0.44

Additional risk adjustments	0.5%	1.0%
Cost of equity	5.50%	7.40%

Tax rate	18.20%	20.20%
Debt/Equity ratio	0.33	0.33
Cost of debt	4.60%	6.00%

After-tax WACC	5.1%	6.8%


Selected WACC	5.9%

3608.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 3608.HK:

cost_of_equity (6.45%) = 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.