970.HK WACC - Weighted Average Cost of Capital

The WACC of Sparkle Roll Group Ltd (970.HK) is 6.8%.

The Cost of Equity of Sparkle Roll Group Ltd (970.HK) is 15.05%.

The Cost of Debt of Sparkle Roll Group Ltd (970.HK) is 6.85%.

	Range	Selected
Cost of equity	10.40% - 19.70%	15.05%
Tax rate	14.70% - 37.60%	26.15%
Cost of debt	6.70% - 7.00%	6.85%
WACC	6.5% - 7.1%	6.8%

WACC

970.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.25	2.27

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.40%	19.70%

Tax rate	14.70%	37.60%
Debt/Equity ratio	4.55	4.55
Cost of debt	6.70%	7.00%

After-tax WACC	6.5%	7.1%


Selected WACC	6.8%

970.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 970.HK:

cost_of_equity (15.05%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.25) + 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.