854.HK WACC - Weighted Average Cost of Capital

The WACC of Willas-Array Electronics (Holdings) Ltd (854.HK) is 5.7%.

The Cost of Equity of Willas-Array Electronics (Holdings) Ltd (854.HK) is 6.30%.

The Cost of Debt of Willas-Array Electronics (Holdings) Ltd (854.HK) is 6.30%.

	Range	Selected
Cost of equity	5.40% - 7.20%	6.30%
Tax rate	11.60% - 17.40%	14.50%
Cost of debt	5.60% - 7.00%	6.30%
WACC	5.1% - 6.3%	5.7%

WACC

854.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.42	0.48

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.40%	7.20%

Tax rate	11.60%	17.40%
Debt/Equity ratio	1.99	1.99
Cost of debt	5.60%	7.00%

After-tax WACC	5.1%	6.3%


Selected WACC	5.7%

854.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 854.HK:

cost_of_equity (6.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.42) + 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.