861.HK WACC - Weighted Average Cost of Capital

The WACC of Digital China Holdings Ltd (861.HK) is 6.9%.

The Cost of Equity of Digital China Holdings Ltd (861.HK) is 7.10%.

The Cost of Debt of Digital China Holdings Ltd (861.HK) is 7.70%.

	Range	Selected
Cost of equity	5.30% - 8.90%	7.10%
Tax rate	10.70% - 13.80%	12.25%
Cost of debt	4.00% - 11.40%	7.70%
WACC	4.6% - 9.3%	6.9%

WACC

861.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.4	0.72

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.30%	8.90%

Tax rate	10.70%	13.80%
Debt/Equity ratio	0.69	0.69
Cost of debt	4.00%	11.40%

After-tax WACC	4.6%	9.3%


Selected WACC	6.9%

861.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 861.HK:

cost_of_equity (7.10%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.4) + 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.