3778.HK WACC - Weighted Average Cost of Capital

The WACC of China Weaving Materials Holdings Ltd (3778.HK) is 10.8%.

The Cost of Equity of China Weaving Materials Holdings Ltd (3778.HK) is 11.40%.

The Cost of Debt of China Weaving Materials Holdings Ltd (3778.HK) is 13.45%.

	Range	Selected
Cost of equity	9.80% - 13.00%	11.40%
Tax rate	17.00% - 24.90%	20.95%
Cost of debt	4.00% - 22.90%	13.45%
WACC	6.4% - 15.2%	10.8%

WACC

3778.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.17	1.31

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.80%	13.00%

Tax rate	17.00%	24.90%
Debt/Equity ratio	1.11	1.11
Cost of debt	4.00%	22.90%

After-tax WACC	6.4%	15.2%


Selected WACC	10.8%

3778.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 3778.HK:

cost_of_equity (11.40%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.17) + 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.