The WACC of Aceso Life Science Group Ltd (474.HK) is 13.2%.
| Range | Selected | |
| Cost of equity | 5.30% - 10.00% | 7.65% |
| Tax rate | 3.30% - 5.30% | 4.30% |
| Cost of debt | 5.70% - 22.90% | 14.30% |
| WACC | 5.5% - 20.9% | 13.2% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.07 | 0.59 |
| Additional risk adjustments | 2.0% | 2.5% |
| Cost of equity | 5.30% | 10.00% |
| Tax rate | 3.30% | 5.30% |
| Debt/Equity ratio | 14.43 | 14.43 |
| Cost of debt | 5.70% | 22.90% |
| After-tax WACC | 5.5% | 20.9% |
| Selected WACC | 13.2% | |
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 474.HK:
cost_of_equity (7.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.07) + risk_adjustments (2.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.