725.HK WACC - Weighted Average Cost of Capital

The WACC of Perennial International Ltd (725.HK) is 8.6%.

The Cost of Equity of Perennial International Ltd (725.HK) is 8.55%.

The Cost of Debt of Perennial International Ltd (725.HK) is 20.95%.

	Range	Selected
Cost of equity	5.50% - 11.60%	8.55%
Tax rate	9.90% - 10.20%	10.05%
Cost of debt	4.00% - 37.90%	20.95%
WACC	5.5% - 11.6%	8.6%

WACC

725.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.44	1.11

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.50%	11.60%

Tax rate	9.90%	10.20%
Debt/Equity ratio	0	0
Cost of debt	4.00%	37.90%

After-tax WACC	5.5%	11.6%


Selected WACC	8.6%

725.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 725.HK:

cost_of_equity (8.55%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.44) + 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.