974.HK WACC - Weighted Average Cost of Capital

The WACC of China Shun Ke Long Holdings Ltd (974.HK) is 9.5%.

The Cost of Equity of China Shun Ke Long Holdings Ltd (974.HK) is 11.55%.

The Cost of Debt of China Shun Ke Long Holdings Ltd (974.HK) is 5.85%.

	Range	Selected
Cost of equity	10.20% - 12.90%	11.55%
Tax rate	1.00% - 1.40%	1.20%
Cost of debt	4.70% - 7.00%	5.85%
WACC	8.2% - 10.7%	9.5%

WACC

974.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.22	1.29

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.20%	12.90%

Tax rate	1.00%	1.40%
Debt/Equity ratio	0.57	0.57
Cost of debt	4.70%	7.00%

After-tax WACC	8.2%	10.7%


Selected WACC	9.5%

974.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 974.HK:

cost_of_equity (11.55%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.22) + 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.