The WACC of Mingfa Group (International) Co Ltd (846.HK) is 4.0%.
Range | Selected | |
Cost of equity | 5.1% - 7.4% | 6.25% |
Tax rate | 22.1% - 22.3% | 22.2% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 3.6% - 4.4% | 4.0% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.37 | 0.5 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.1% | 7.4% |
Tax rate | 22.1% | 22.3% |
Debt/Equity ratio | 3.49 | 3.49 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 3.6% | 4.4% |
Selected WACC | 4.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
846.HK | Mingfa Group (International) Co Ltd | 3.49 | 0.54 | 0.15 |
1098.HK | Road King Infrastructure Ltd | 26.1 | 1.68 | 0.08 |
1125.HK | Lai Fung Holdings Ltd | 27.82 | 0.34 | 0.01 |
185.HK | Zensun Enterprises Ltd | 97.36 | 0.16 | 0 |
2768.HK | Jiayuan International Group Ltd | 21.18 | 1.09 | 0.06 |
34.HK | Kowloon Development Co Ltd | 5.28 | 0.67 | 0.13 |
432.HK | Pacific Century Premium Developments Ltd | 24.14 | 0.4 | 0.02 |
627.HK | Fullsun International Holdings Group Co Ltd | 0.32 | -0.03 | -0.02 |
845.HK | Glorious Property Holdings Ltd | 318.64 | 1.36 | 0.01 |
95.HK | LVGEM (China) Real Estate Investment Co Ltd | 27.66 | 1.91 | 0.08 |
Low | High | |
Unlevered beta | 0.02 | 0.07 |
Relevered beta | 0.06 | 0.25 |
Adjusted relevered beta | 0.37 | 0.5 |
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 (6.25%) = 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.