616.HK WACC - Weighted Average Cost of Capital

The WACC of Eminence Enterprise Ltd (616.HK) is 5.9%.

The Cost of Equity of Eminence Enterprise Ltd (616.HK) is 20.45%.

The Cost of Debt of Eminence Enterprise Ltd (616.HK) is 5.60%.

	Range	Selected
Cost of equity	11.30% - 29.60%	20.45%
Tax rate	3.30% - 4.20%	3.75%
Cost of debt	4.20% - 7.00%	5.60%
WACC	4.3% - 7.5%	5.9%

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	1.41	3.69

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.30%	29.60%

Tax rate	3.30%	4.20%
Debt/Equity ratio	29.47	29.47
Cost of debt	4.20%	7.00%

After-tax WACC	4.3%	7.5%


Selected WACC	5.9%

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 (20.45%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.41) + 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.