8427.HK WACC - Weighted Average Cost of Capital

The WACC of SK Target Group Ltd (8427.HK) is 8.4%.

The Cost of Equity of SK Target Group Ltd (8427.HK) is 8.60%.

The Cost of Debt of SK Target Group Ltd (8427.HK) is 4.25%.

	Range	Selected
Cost of equity	6.90% - 10.30%	8.60%
Tax rate	21.90% - 49.40%	35.65%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.8% - 10.0%	8.4%

WACC

8427.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.68	0.92

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	10.30%

Tax rate	21.90%	49.40%
Debt/Equity ratio	0.03	0.03
Cost of debt	4.00%	4.50%

After-tax WACC	6.8%	10.0%


Selected WACC	8.4%

8427.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 8427.HK:

cost_of_equity (8.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.68) + 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.