6888.HK WACC - Weighted Average Cost of Capital

The WACC of Freetech Road Recycling Technology (Holdings) Ltd (6888.HK) is 8.5%.

The Cost of Equity of Freetech Road Recycling Technology (Holdings) Ltd (6888.HK) is 6.50%.

The Cost of Debt of Freetech Road Recycling Technology (Holdings) Ltd (6888.HK) is 13.45%.

	Range	Selected
Cost of equity	5.30% - 7.70%	6.50%
Tax rate	12.80% - 14.00%	13.40%
Cost of debt	4.00% - 22.90%	13.45%
WACC	4.6% - 12.4%	8.5%

WACC

6888.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.4	0.55

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.30%	7.70%

Tax rate	12.80%	14.00%
Debt/Equity ratio	0.65	0.65
Cost of debt	4.00%	22.90%

After-tax WACC	4.6%	12.4%


Selected WACC	8.5%

6888.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 6888.HK:

cost_of_equity (6.50%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.4) + 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.