3686.HK WACC - Weighted Average Cost of Capital

The WACC of Clifford Modern Living Holdings Ltd (3686.HK) is 8.2%.

The Cost of Equity of Clifford Modern Living Holdings Ltd (3686.HK) is 8.65%.

The Cost of Debt of Clifford Modern Living Holdings Ltd (3686.HK) is 4.25%.

	Range	Selected
Cost of equity	6.90% - 10.40%	8.65%
Tax rate	26.30% - 27.80%	27.05%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.6% - 9.7%	8.2%

WACC

3686.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.68	0.93

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	10.40%

Tax rate	26.30%	27.80%
Debt/Equity ratio	0.1	0.1
Cost of debt	4.00%	4.50%

After-tax WACC	6.6%	9.7%


Selected WACC	8.2%

3686.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 3686.HK:

cost_of_equity (8.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.68) + 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.