The WACC of Top Spring International Holdings Ltd (3688.HK) is 4.9%.
Range | Selected | |
Cost of equity | 5.7% - 8.2% | 6.95% |
Tax rate | 10.0% - 37.0% | 23.5% |
Cost of debt | 5.6% - 7.0% | 6.3% |
WACC | 5.1% - 4.7% | 4.9% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.47 | 0.62 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.7% | 8.2% |
Tax rate | 10.0% | 37.0% |
Debt/Equity ratio | 14.1 | 14.1 |
Cost of debt | 5.6% | 7.0% |
After-tax WACC | 5.1% | 4.7% |
Selected WACC | 4.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
3688.HK | Top Spring International Holdings Ltd | 14.1 | 1.05 | 0.08 |
1125.HK | Lai Fung Holdings Ltd | 27.82 | 0.34 | 0.01 |
1207.HK | SRE Group Ltd | 20.99 | 1.23 | 0.06 |
1218.HK | Easyknit International Holdings Ltd | 21.99 | -0.13 | -0.01 |
1278.HK | China New Town Development Co Ltd | 2.52 | 1 | 0.31 |
160.HK | Hon Kwok Land Investment Co Ltd | 8.5 | 0.37 | 0.04 |
216.HK | Chinney Investments Ltd | 23.9 | 0.55 | 0.02 |
2892.HK | Million Cities Holdings Ltd | 0 | -0.22 | -0.22 |
432.HK | Pacific Century Premium Developments Ltd | 24.14 | 0.4 | 0.02 |
938.HK | Man Sang International Ltd | 7.18 | -1.05 | -0.14 |
Low | High | |
Unlevered beta | 0.02 | 0.03 |
Relevered beta | 0.21 | 0.43 |
Adjusted relevered beta | 0.47 | 0.62 |
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 3688.HK:
cost_of_equity (6.95%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.47) + 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.