8439.HK WACC - Weighted Average Cost of Capital

The WACC of Somerley Capital Holdings Ltd (8439.HK) is 7.0%.

The Cost of Equity of Somerley Capital Holdings Ltd (8439.HK) is 6.55%.

The Cost of Debt of Somerley Capital Holdings Ltd (8439.HK) is 9.50%.

	Range	Selected
Cost of equity	5.40% - 7.70%	6.55%
Tax rate	1.20% - 1.80%	1.50%
Cost of debt	7.00% - 12.00%	9.50%
WACC	5.7% - 8.4%	7.0%

WACC

8439.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.34	0.47

Additional risk adjustments	0.5%	1.0%
Cost of equity	5.40%	7.70%

Tax rate	1.20%	1.80%
Debt/Equity ratio	0.22	0.22
Cost of debt	7.00%	12.00%

After-tax WACC	5.7%	8.4%


Selected WACC	7.0%

8439.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 8439.HK:

cost_of_equity (6.55%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.34) + risk_adjustments (0.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.