616.HK WACC - Weighted Average Cost of Capital

The WACC of Eminence Enterprise Ltd (616.HK) is 6.4%.

The Cost of Equity of Eminence Enterprise Ltd (616.HK) is 6.15%.

The Cost of Debt of Eminence Enterprise Ltd (616.HK) is 6.55%.

	Range	Selected
Cost of equity	5.20% - 7.10%	6.15%
Tax rate	2.40% - 3.10%	2.75%
Cost of debt	6.10% - 7.00%	6.55%
WACC	5.9% - 6.8%	6.4%

WACC

616.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.22	0.32

Additional risk adjustments	1.0%	1.5%
Cost of equity	5.20%	7.10%

Tax rate	2.40%	3.10%
Debt/Equity ratio	13.18	13.18
Cost of debt	6.10%	7.00%

After-tax WACC	5.9%	6.8%


Selected WACC	6.4%

616.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 616.HK:

cost_of_equity (6.15%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.22) + risk_adjustments (1.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.