520.HK WACC - Weighted Average Cost of Capital

The WACC of Xiabuxiabu Catering Management China Holdings Co Ltd (520.HK) is 6.2%.

The Cost of Equity of Xiabuxiabu Catering Management China Holdings Co Ltd (520.HK) is 11.00%.

The Cost of Debt of Xiabuxiabu Catering Management China Holdings Co Ltd (520.HK) is 5.50%.

	Range	Selected
Cost of equity	7.50% - 14.50%	11.00%
Tax rate	21.80% - 42.00%	31.90%
Cost of debt	4.00% - 7.00%	5.50%
WACC	4.7% - 7.7%	6.2%

WACC

520.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.78	1.52

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.50%	14.50%

Tax rate	21.80%	42.00%
Debt/Equity ratio	1.85	1.85
Cost of debt	4.00%	7.00%

After-tax WACC	4.7%	7.7%


Selected WACC	6.2%

520.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 520.HK:

cost_of_equity (11.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.78) + 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.