408.HK WACC - Weighted Average Cost of Capital

The WACC of Yip's Chemical Holdings Ltd (408.HK) is 7.7%.

The Cost of Equity of Yip's Chemical Holdings Ltd (408.HK) is 8.55%.

The Cost of Debt of Yip's Chemical Holdings Ltd (408.HK) is 9.30%.

	Range	Selected
Cost of equity	6.50% - 10.60%	8.55%
Tax rate	21.50% - 23.20%	22.35%
Cost of debt	4.00% - 14.60%	9.30%
WACC	4.3% - 11.0%	7.7%

WACC

408.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.61	0.97

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.50%	10.60%

Tax rate	21.50%	23.20%
Debt/Equity ratio	1.98	1.98
Cost of debt	4.00%	14.60%

After-tax WACC	4.3%	11.0%


Selected WACC	7.7%

408.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 408.HK:

cost_of_equity (8.55%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.61) + 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.