3728.HK WACC - Weighted Average Cost of Capital

The WACC of Ching Lee Holdings Ltd (3728.HK) is 5.5%.

The Cost of Equity of Ching Lee Holdings Ltd (3728.HK) is 6.85%.

The Cost of Debt of Ching Lee Holdings Ltd (3728.HK) is 6.25%.

	Range	Selected
Cost of equity	5.10% - 8.60%	6.85%
Tax rate	15.20% - 17.50%	16.35%
Cost of debt	6.00% - 6.50%	6.25%
WACC	5.1% - 5.9%	5.5%

WACC

3728.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.04	0.4

Additional risk adjustments	2.0%	2.5%
Cost of equity	5.10%	8.60%

Tax rate	15.20%	17.50%
Debt/Equity ratio	5.47	5.47
Cost of debt	6.00%	6.50%

After-tax WACC	5.1%	5.9%


Selected WACC	5.5%

3728.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 3728.HK:

cost_of_equity (6.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.04) + risk_adjustments (2.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.