6988.HK WACC - Weighted Average Cost of Capital

The WACC of Joy Spreader Interactive Technology Ltd (6988.HK) is 8.5%.

The Cost of Equity of Joy Spreader Interactive Technology Ltd (6988.HK) is 8.60%.

The Cost of Debt of Joy Spreader Interactive Technology Ltd (6988.HK) is 6.45%.

	Range	Selected
Cost of equity	6.70% - 10.50%	8.60%
Tax rate	0.70% - 1.60%	1.15%
Cost of debt	5.90% - 7.00%	6.45%
WACC	6.6% - 10.3%	8.5%

WACC

6988.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.64	0.95

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.70%	10.50%

Tax rate	0.70%	1.60%
Debt/Equity ratio	0.07	0.07
Cost of debt	5.90%	7.00%

After-tax WACC	6.6%	10.3%


Selected WACC	8.5%

6988.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 6988.HK:

cost_of_equity (8.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.64) + 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.