638.HK WACC - Weighted Average Cost of Capital

The WACC of Kin Yat Holdings Ltd (638.HK) is 6.1%.

The Cost of Equity of Kin Yat Holdings Ltd (638.HK) is 7.75%.

The Cost of Debt of Kin Yat Holdings Ltd (638.HK) is 5.50%.

	Range	Selected
Cost of equity	6.70% - 8.80%	7.75%
Tax rate	11.50% - 16.40%	13.95%
Cost of debt	4.00% - 7.00%	5.50%
WACC	5.0% - 7.2%	6.1%

WACC

638.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.64	0.71

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.70%	8.80%

Tax rate	11.50%	16.40%
Debt/Equity ratio	1.21	1.21
Cost of debt	4.00%	7.00%

After-tax WACC	5.0%	7.2%


Selected WACC	6.1%

638.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 638.HK:

cost_of_equity (7.75%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.64) + 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.