8607.HK WACC - Weighted Average Cost of Capital

The WACC of Narnia (Hong Kong) Group Co Ltd (8607.HK) is 9.6%.

The Cost of Equity of Narnia (Hong Kong) Group Co Ltd (8607.HK) is 17.65%.

The Cost of Debt of Narnia (Hong Kong) Group Co Ltd (8607.HK) is 6.10%.

	Range	Selected
Cost of equity	12.50% - 22.80%	17.65%
Tax rate	9.50% - 14.40%	11.95%
Cost of debt	5.20% - 7.00%	6.10%
WACC	7.4% - 11.8%	9.6%

WACC

8607.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.6	2.71

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.50%	22.80%

Tax rate	9.50%	14.40%
Debt/Equity ratio	1.9	1.9
Cost of debt	5.20%	7.00%

After-tax WACC	7.4%	11.8%


Selected WACC	9.6%

8607.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 8607.HK:

cost_of_equity (17.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.6) + 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.