837.HK WACC - Weighted Average Cost of Capital

The WACC of Carpenter Tan Holdings Ltd (837.HK) is 11.0%.

The Cost of Equity of Carpenter Tan Holdings Ltd (837.HK) is 11.10%.

The Cost of Debt of Carpenter Tan Holdings Ltd (837.HK) is 4.35%.

	Range	Selected
Cost of equity	9.60% - 12.60%	11.10%
Tax rate	18.50% - 19.50%	19.00%
Cost of debt	4.00% - 4.70%	4.35%
WACC	9.6% - 12.5%	11.0%

WACC

837.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.13	1.26

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.60%	12.60%

Tax rate	18.50%	19.50%
Debt/Equity ratio	0.01	0.01
Cost of debt	4.00%	4.70%

After-tax WACC	9.6%	12.5%


Selected WACC	11.0%

837.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 837.HK:

cost_of_equity (11.10%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.13) + 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.