The WACC of Sam Woo Construction Group Ltd (3822.HK) is 8.0%.
| Range | Selected | |
| Cost of equity | 3.20% - 5.00% | 4.10% |
| Tax rate | 3.80% - 5.60% | 4.70% |
| Cost of debt | 4.00% - 14.60% | 9.30% |
| WACC | 3.8% - 12.2% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | -0.02 | 0.09 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 3.20% | 5.00% |
| Tax rate | 3.80% | 5.60% |
| Debt/Equity ratio | 4.35 | 4.35 |
| Cost of debt | 4.00% | 14.60% |
| After-tax WACC | 3.8% | 12.2% |
| Selected WACC | 8.0% | |
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 3822.HK:
cost_of_equity (4.10%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (-0.02) + 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.