The WACC of Prosper Construction Holdings Ltd (6816.HK) is 5.6%.
Range | Selected | |
Cost of equity | 34.9% - 45.1% | 40% |
Tax rate | 29.3% - 44.6% | 36.95% |
Cost of debt | 5.9% - 7.0% | 6.45% |
WACC | 5.5% - 5.7% | 5.6% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 5.35 | 5.91 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 34.9% | 45.1% |
Tax rate | 29.3% | 44.6% |
Debt/Equity ratio | 21.66 | 21.66 |
Cost of debt | 5.9% | 7.0% |
After-tax WACC | 5.5% | 5.7% |
Selected WACC | 5.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
6816.HK | Prosper Construction Holdings Ltd | 21.66 | 0.55 | 0.04 |
1429.HK | Skymission Group Holdings Ltd | 0.73 | 0.81 | 0.57 |
1472.HK | Sang Hing Holdings (International) Ltd | 0.02 | 0.57 | 0.56 |
1546.HK | Thelloy Development Group Ltd | 0.36 | 0.01 | 0.01 |
1559.HK | Kwan On Holdings Ltd | 0.47 | 0.82 | 0.65 |
3708.HK | China Supply Chain Holdings Ltd | 0.04 | 0.8 | 0.78 |
6080.HK | Wing Chi Holdings Ltd | 0.33 | 0.7 | 0.59 |
784.HK | Ling Yui Holdings Ltd | 0.59 | 0.99 | 0.74 |
8216.HK | Maxicity Holdings Ltd | 0 | 1.08 | 1.07 |
8523.HK | Sheung Moon Holdings Ltd | 0.74 | -0.13 | -0.09 |
Low | High | |
Unlevered beta | 0.57 | 0.61 |
Relevered beta | 7.49 | 8.33 |
Adjusted relevered beta | 5.35 | 5.91 |
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 6816.HK:
cost_of_equity (40.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (5.35) + 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.