3989.HK WACC - Weighted Average Cost of Capital

The WACC of Capital Environment Holdings Ltd (3989.HK) is 5.8%.

The Cost of Equity of Capital Environment Holdings Ltd (3989.HK) is 19.20%.

The Cost of Debt of Capital Environment Holdings Ltd (3989.HK) is 6.05%.

	Range	Selected
Cost of equity	12.40% - 26.00%	19.20%
Tax rate	22.20% - 25.40%	23.80%
Cost of debt	4.00% - 8.10%	6.05%
WACC	3.9% - 7.7%	5.8%

WACC

3989.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.6	3.18

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.40%	26.00%

Tax rate	22.20%	25.40%
Debt/Equity ratio	11.25	11.25
Cost of debt	4.00%	8.10%

After-tax WACC	3.9%	7.7%


Selected WACC	5.8%

3989.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 3989.HK:

cost_of_equity (19.20%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.6) + 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.