8646.HK WACC - Weighted Average Cost of Capital

The WACC of China Hongguang Holdings Ltd (8646.HK) is 9.9%.

The Cost of Equity of China Hongguang Holdings Ltd (8646.HK) is 12.75%.

The Cost of Debt of China Hongguang Holdings Ltd (8646.HK) is 6.80%.

	Range	Selected
Cost of equity	10.00% - 15.50%	12.75%
Tax rate	10.50% - 11.20%	10.85%
Cost of debt	4.00% - 9.60%	6.80%
WACC	7.3% - 12.5%	9.9%

WACC

8646.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.2	1.67

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.00%	15.50%

Tax rate	10.50%	11.20%
Debt/Equity ratio	0.74	0.74
Cost of debt	4.00%	9.60%

After-tax WACC	7.3%	12.5%


Selected WACC	9.9%

8646.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 8646.HK:

cost_of_equity (12.75%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.2) + 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.