970.HK WACC - Weighted Average Cost of Capital

The WACC of Sparkle Roll Group Ltd (970.HK) is 7.0%.

The Cost of Equity of Sparkle Roll Group Ltd (970.HK) is 14.50%.

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

	Range	Selected
Cost of equity	10.90% - 18.10%	14.50%
Tax rate	14.70% - 37.60%	26.15%
Cost of debt	6.70% - 7.00%	6.85%
WACC	6.8% - 7.3%	7.0%

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	1.34	2.04

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.90%	18.10%

Tax rate	14.70%	37.60%
Debt/Equity ratio	3.71	3.71
Cost of debt	6.70%	7.00%

After-tax WACC	6.8%	7.3%


Selected WACC	7.0%

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 (14.50%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.34) + 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.