6820.HK WACC - Weighted Average Cost of Capital
The WACC of FriendTimes Inc (6820.HK) is 8.2%.
| Range | Selected | |
| Cost of equity | 6.1% - 10.9% | 8.5% |
| Tax rate | 12.4% - 25.2% | 18.8% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 5.9% - 10.5% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.55 | 1.01 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.1% | 10.9% |
| Tax rate | 12.4% | 25.2% |
| Debt/Equity ratio | 0.08 | 0.08 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 5.9% | 10.5% |
| Selected WACC | 8.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 6820.HK | FriendTimes Inc | 0.08 | 0.83 | 0.78 |
| 002354.SZ | Dalian Zeus Entertainment Co Ltd | 0 | 1.5 | 1.49 |
| 002425.SZ | Kaiser China Culture Co Ltd | 0.04 | 0.05 | 0.05 |
| 002517.SZ | Kingnet Network Co Ltd | 0 | 1.32 | 1.31 |
| 2100.HK | Baioo Family Interactive Ltd | 0.01 | 0.39 | 0.39 |
| 300031.SZ | Wuxi Boton Technology Ltd | 0.12 | 1.34 | 1.22 |
| 300113.SZ | Hangzhou Shunwang Technology Co Ltd | 0.01 | 1.88 | 1.87 |
| 3798.HK | Homeland Interactive Technology Ltd | 0.02 | -0.2 | -0.2 |
| 6860.HK | FingerTango Inc | 0.05 | 0.18 | 0.17 |
| 797.HK | 7Road Holdings Ltd | 0.2 | -0.84 | -0.72 |
| Low | High | |
| Unlevered beta | 0.3 | 0.95 |
| Relevered beta | 0.33 | 1.01 |
| Adjusted relevered beta | 0.55 | 1.01 |
6820.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 6820.HK:
cost_of_equity (8.50%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.55) + 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.