The WACC of Kwg Living Group Holdings Ltd (3913.HK) is 10.0%.
Range | Selected | |
Cost of equity | 13.50% - 17.10% | 15.30% |
Tax rate | 25.80% - 37.00% | 31.40% |
Cost of debt | 4.40% - 7.00% | 5.70% |
WACC | 8.7% - 11.2% | 10.0% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 1.78 | 1.9 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 13.50% | 17.10% |
Tax rate | 25.80% | 37.00% |
Debt/Equity ratio | 0.87 | 0.87 |
Cost of debt | 4.40% | 7.00% |
After-tax WACC | 8.7% | 11.2% |
Selected WACC | 10.0% | |
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 3913.HK:
cost_of_equity (15.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.78) + 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.