861.HK WACC - Weighted Average Cost of Capital

The WACC of Digital China Holdings Ltd (861.HK) is 7.2%.

The Cost of Equity of Digital China Holdings Ltd (861.HK) is 10.80%.

The Cost of Debt of Digital China Holdings Ltd (861.HK) is 4.25%.

	Range	Selected
Cost of equity	9.40% - 12.20%	10.80%
Tax rate	10.70% - 14.20%	12.45%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.4% - 7.9%	7.2%

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	1.09	1.19

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.40%	12.20%

Tax rate	10.70%	14.20%
Debt/Equity ratio	1.06	1.06
Cost of debt	4.00%	4.50%

After-tax WACC	6.4%	7.9%


Selected WACC	7.2%

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 (10.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.09) + 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.