574.HK WACC - Weighted Average Cost of Capital

The WACC of Pa Shun International Holdings Ltd (574.HK) is 7.9%.

The Cost of Equity of Pa Shun International Holdings Ltd (574.HK) is 18.15%.

The Cost of Debt of Pa Shun International Holdings Ltd (574.HK) is 5.50%.

	Range	Selected
Cost of equity	9.60% - 26.70%	18.15%
Tax rate	1.80% - 2.10%	1.95%
Cost of debt	4.00% - 7.00%	5.50%
WACC	5.1% - 10.8%	7.9%

WACC

574.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.13	3.27

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.60%	26.70%

Tax rate	1.80%	2.10%
Debt/Equity ratio	4.03	4.03
Cost of debt	4.00%	7.00%

After-tax WACC	5.1%	10.8%


Selected WACC	7.9%

574.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 574.HK:

cost_of_equity (18.15%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.13) + 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.