6878.HK WACC - Weighted Average Cost of Capital

The WACC of Differ Group Holding Co Ltd (6878.HK) is 5.2%.

The Cost of Equity of Differ Group Holding Co Ltd (6878.HK) is 26.70%.

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

	Range	Selected
Cost of equity	16.50% - 36.90%	26.70%
Tax rate	26.90% - 29.80%	28.35%
Cost of debt	6.60% - 7.00%	6.80%
WACC	5.0% - 5.4%	5.2%

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	2.29	4.73

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.50%	36.90%

Tax rate	26.90%	29.80%
Debt/Equity ratio	71.93	71.93
Cost of debt	6.60%	7.00%

After-tax WACC	5.0%	5.4%


Selected WACC	5.2%

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 (26.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (2.29) + 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.