897.HK WACC - Weighted Average Cost of Capital

The WACC of Wai Yuen Tong Medicine Holdings Ltd (897.HK) is 5.9%.

The Cost of Equity of Wai Yuen Tong Medicine Holdings Ltd (897.HK) is 7.60%.

The Cost of Debt of Wai Yuen Tong Medicine Holdings Ltd (897.HK) is 6.10%.

	Range	Selected
Cost of equity	5.90% - 9.30%	7.60%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	5.20% - 7.00%	6.10%
WACC	4.8% - 7.0%	5.9%

WACC

897.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.51	0.77

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.90%	9.30%

Tax rate	22.10%	22.30%
Debt/Equity ratio	1.38	1.38
Cost of debt	5.20%	7.00%

After-tax WACC	4.8%	7.0%


Selected WACC	5.9%

897.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 897.HK:

cost_of_equity (7.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.51) + 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.