674.HK WACC - Weighted Average Cost of Capital

The WACC of China Tangshang Holdings Ltd (674.HK) is 5.1%.

The Cost of Equity of China Tangshang Holdings Ltd (674.HK) is 6.85%.

The Cost of Debt of China Tangshang Holdings Ltd (674.HK) is 6.50%.

	Range	Selected
Cost of equity	5.80% - 7.90%	6.85%
Tax rate	35.20% - 36.00%	35.60%
Cost of debt	4.90% - 8.10%	6.50%
WACC	4.1% - 6.1%	5.1%

WACC

674.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.49	0.58

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.80%	7.90%

Tax rate	35.20%	36.00%
Debt/Equity ratio	1.86	1.86
Cost of debt	4.90%	8.10%

After-tax WACC	4.1%	6.1%


Selected WACC	5.1%

674.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 674.HK:

cost_of_equity (6.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.49) + 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.