602.HK WACC - Weighted Average Cost of Capital

The WACC of Jiahua Stores Holdings Ltd (602.HK) is 15.7%.

The Cost of Equity of Jiahua Stores Holdings Ltd (602.HK) is 28.25%.

The Cost of Debt of Jiahua Stores Holdings Ltd (602.HK) is 15.10%.

	Range	Selected
Cost of equity	18.50% - 38.00%	28.25%
Tax rate	0.70% - 1.50%	1.10%
Cost of debt	7.30% - 22.90%	15.10%
WACC	8.0% - 23.5%	15.7%

WACC

602.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	2.62	4.89

Additional risk adjustments	0.0%	0.5%
Cost of equity	18.50%	38.00%

Tax rate	0.70%	1.50%
Debt/Equity ratio	14.83	14.83
Cost of debt	7.30%	22.90%

After-tax WACC	8.0%	23.5%


Selected WACC	15.7%

602.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 602.HK:

cost_of_equity (28.25%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (2.62) + 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.