846.HK WACC - Weighted Average Cost of Capital

The WACC of Mingfa Group (International) Co Ltd (846.HK) is 5.0%.

The Cost of Equity of Mingfa Group (International) Co Ltd (846.HK) is 6.15%.

The Cost of Debt of Mingfa Group (International) Co Ltd (846.HK) is 5.95%.

	Range	Selected
Cost of equity	5.10% - 7.20%	6.15%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	4.10% - 7.80%	5.95%
WACC	3.6% - 6.3%	5.0%

WACC

846.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.37	0.47

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.10%	7.20%

Tax rate	22.10%	22.30%
Debt/Equity ratio	3.36	3.36
Cost of debt	4.10%	7.80%

After-tax WACC	3.6%	6.3%


Selected WACC	5.0%

846.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 846.HK:

cost_of_equity (6.15%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.37) + 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.