6878.HK WACC - Weighted Average Cost of Capital

The WACC of Differ Group Holding Co Ltd (6878.HK) is 5.1%.

The Cost of Equity of Differ Group Holding Co Ltd (6878.HK) is 21.65%.

The Cost of Debt of Differ Group Holding Co Ltd (6878.HK) is 6.80%.

	Range	Selected
Cost of equity	14.00% - 29.30%	21.65%
Tax rate	26.90% - 29.80%	28.35%
Cost of debt	6.60% - 7.00%	6.80%
WACC	4.9% - 5.3%	5.1%

WACC

6878.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.86	3.65

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.00%	29.30%

Tax rate	26.90%	29.80%
Debt/Equity ratio	70.56	70.56
Cost of debt	6.60%	7.00%

After-tax WACC	4.9%	5.3%


Selected WACC	5.1%

6878.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 6878.HK:

cost_of_equity (21.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.86) + 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.