396.HK WACC - Weighted Average Cost of Capital

The WACC of Hing Lee (Hk) Holdings Ltd (396.HK) is 7.3%.

The Cost of Equity of Hing Lee (Hk) Holdings Ltd (396.HK) is 7.40%.

The Cost of Debt of Hing Lee (Hk) Holdings Ltd (396.HK) is 6.75%.

	Range	Selected
Cost of equity	5.30% - 9.50%	7.40%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	5.40% - 8.10%	6.75%
WACC	5.2% - 9.4%	7.3%

WACC

396.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.4	0.81

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.30%	9.50%

Tax rate	22.10%	22.30%
Debt/Equity ratio	0.03	0.03
Cost of debt	5.40%	8.10%

After-tax WACC	5.2%	9.4%


Selected WACC	7.3%

396.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 396.HK:

cost_of_equity (7.40%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.4) + 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.