9938.HK WACC - Weighted Average Cost of Capital

The WACC of Wah Wo Holdings Group Ltd (9938.HK) is 8.0%.

The Cost of Equity of Wah Wo Holdings Group Ltd (9938.HK) is 7.85%.

The Cost of Debt of Wah Wo Holdings Group Ltd (9938.HK) is 12.90%.

	Range	Selected
Cost of equity	6.60% - 9.10%	7.85%
Tax rate	26.70% - 28.90%	27.80%
Cost of debt	4.00% - 21.80%	12.90%
WACC	6.4% - 9.5%	8.0%

WACC

9938.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.63	0.76

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.60%	9.10%

Tax rate	26.70%	28.90%
Debt/Equity ratio	0.06	0.06
Cost of debt	4.00%	21.80%

After-tax WACC	6.4%	9.5%


Selected WACC	8.0%

9938.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 9938.HK:

cost_of_equity (7.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.63) + 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.