825.HK WACC - Weighted Average Cost of Capital

The WACC of New World Department Store China Ltd (825.HK) is 7.0%.

The Cost of Equity of New World Department Store China Ltd (825.HK) is 14.30%.

The Cost of Debt of New World Department Store China Ltd (825.HK) is 9.30%.

	Range	Selected
Cost of equity	8.10% - 20.50%	14.30%
Tax rate	19.30% - 37.40%	28.35%
Cost of debt	4.00% - 14.60%	9.30%
WACC	3.7% - 10.3%	7.0%

WACC

825.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.87	2.39

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.10%	20.50%

Tax rate	19.30%	37.40%
Debt/Equity ratio	9.45	9.45
Cost of debt	4.00%	14.60%

After-tax WACC	3.7%	10.3%


Selected WACC	7.0%

825.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 825.HK:

cost_of_equity (14.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.87) + 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.