838.HK WACC - Weighted Average Cost of Capital

The WACC of Eva Precision Industrial Holdings Ltd (838.HK) is 6.7%.

The Cost of Equity of Eva Precision Industrial Holdings Ltd (838.HK) is 10.80%.

The Cost of Debt of Eva Precision Industrial Holdings Ltd (838.HK) is 5.20%.

	Range	Selected
Cost of equity	8.20% - 13.40%	10.80%
Tax rate	13.10% - 15.00%	14.05%
Cost of debt	4.40% - 6.00%	5.20%
WACC	5.3% - 8.0%	6.7%

WACC

838.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.89	1.37

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.20%	13.40%

Tax rate	13.10%	15.00%
Debt/Equity ratio	1.9	1.9
Cost of debt	4.40%	6.00%

After-tax WACC	5.3%	8.0%


Selected WACC	6.7%

838.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 838.HK:

cost_of_equity (10.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.89) + 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.