The WACC of Janco Holdings Ltd (8035.HK) is 6.6%.
| Range | Selected | |
| Cost of equity | 5.70% - 8.30% | 7.00% |
| Tax rate | 6.70% - 10.40% | 8.55% |
| Cost of debt | 6.50% - 7.00% | 6.75% |
| WACC | 5.9% - 7.2% | 6.6% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.47 | 0.64 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.70% | 8.30% |
| Tax rate | 6.70% | 10.40% |
| Debt/Equity ratio | 1.1 | 1.1 |
| Cost of debt | 6.50% | 7.00% |
| After-tax WACC | 5.9% | 7.2% |
| Selected WACC | 6.6% | |
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 8035.HK:
cost_of_equity (7.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.47) + 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.