838.HK WACC - Weighted Average Cost of Capital

The WACC of Eva Precision Industrial Holdings Ltd (838.HK) is 6.6%.

The Cost of Equity of Eva Precision Industrial Holdings Ltd (838.HK) is 10.65%.

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

	Range	Selected
Cost of equity	8.00% - 13.30%	10.65%
Tax rate	13.10% - 15.00%	14.05%
Cost of debt	4.40% - 6.00%	5.20%
WACC	5.3% - 7.9%	6.6%

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	0.86	1.35

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.00%	13.30%

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%	7.9%


Selected WACC	6.6%

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 (10.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.86) + 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.