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 36.30%.

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

	Range	Selected
Cost of equity	22.80% - 49.80%	36.30%
Tax rate	3.30% - 4.20%	3.75%
Cost of debt	4.20% - 7.00%	5.60%
WACC	4.7% - 8.2%	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	3.33	6.58

Additional risk adjustments	0.0%	0.5%
Cost of equity	22.80%	49.80%

Tax rate	3.30%	4.20%
Debt/Equity ratio	28.63	28.63
Cost of debt	4.20%	7.00%

After-tax WACC	4.7%	8.2%


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 (36.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (3.33) + 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.