718.HK WACC - Weighted Average Cost of Capital

The WACC of Tai United Holdings Ltd (718.HK) is 10.6%.

The Cost of Equity of Tai United Holdings Ltd (718.HK) is 6.95%.

The Cost of Debt of Tai United Holdings Ltd (718.HK) is 13.35%.

	Range	Selected
Cost of equity	5.20% - 8.70%	6.95%
Tax rate	12.40% - 15.10%	13.75%
Cost of debt	7.00% - 19.70%	13.35%
WACC	6.0% - 15.3%	10.6%

WACC

718.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.39	0.69

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.20%	8.70%

Tax rate	12.40%	15.10%
Debt/Equity ratio	4.56	4.56
Cost of debt	7.00%	19.70%

After-tax WACC	6.0%	15.3%


Selected WACC	10.6%

718.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 718.HK:

cost_of_equity (6.95%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.39) + 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.