777.HK WACC - Weighted Average Cost of Capital

The WACC of NetDragon Websoft Holdings Ltd (777.HK) is 10.9%.

The Cost of Equity of NetDragon Websoft Holdings Ltd (777.HK) is 12.80%.

The Cost of Debt of NetDragon Websoft Holdings Ltd (777.HK) is 7.70%.

	Range	Selected
Cost of equity	10.90% - 14.70%	12.80%
Tax rate	20.40% - 24.10%	22.25%
Cost of debt	4.10% - 11.30%	7.70%
WACC	8.7% - 13.0%	10.9%

WACC

777.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.35	1.56

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.90%	14.70%

Tax rate	20.40%	24.10%
Debt/Equity ratio	0.4	0.4
Cost of debt	4.10%	11.30%

After-tax WACC	8.7%	13.0%


Selected WACC	10.9%

777.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 777.HK:

cost_of_equity (12.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.35) + 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.