3789.HK WACC - Weighted Average Cost of Capital

The WACC of Royal Deluxe Holdings Ltd (3789.HK) is 6.0%.

The Cost of Equity of Royal Deluxe Holdings Ltd (3789.HK) is 5.95%.

The Cost of Debt of Royal Deluxe Holdings Ltd (3789.HK) is 5.25%.

	Range	Selected
Cost of equity	5.10% - 6.80%	5.95%
Tax rate	19.10% - 22.70%	20.90%
Cost of debt	5.10% - 5.40%	5.25%
WACC	5.1% - 6.8%	6.0%

WACC

3789.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.3	0.35

Additional risk adjustments	0.5%	1.0%
Cost of equity	5.10%	6.80%

Tax rate	19.10%	22.70%
Debt/Equity ratio	0.01	0.01
Cost of debt	5.10%	5.40%

After-tax WACC	5.1%	6.8%


Selected WACC	6.0%

3789.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 3789.HK:

cost_of_equity (5.95%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.3) + 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.