HIHO WACC - Weighted Average Cost of Capital
The WACC of Highway Holdings Ltd (HIHO) is 4.8%.
| Range | Selected | |
| Cost of equity | 4.2% - 7.4% | 5.8% |
| Tax rate | 24.1% - 24.8% | 24.45% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 4.0% - 5.6% | 4.8% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.39 | 0.74 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.2% | 7.4% |
| Tax rate | 24.1% | 24.8% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 4.0% | 5.6% |
| Selected WACC | 4.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| HIHO | Highway Holdings Ltd | 0.85 | -0.05 | -0.03 |
| AAPJ | Aap 101 Inc | 0.22 | -2.71 | -2.33 |
| AGSO | AgriSolar Solutions Inc | 0.05 | 0.32 | 0.31 |
| CFRI | Conforce International Inc | 20.12 | 115.53 | 7.15 |
| EVTN | Enviro Technologies US Inc | 0.1 | 0.68 | 0.64 |
| KGET | Calipharms Inc | 17.06 | -14.41 | -1.04 |
| MMTC | Micro Imaging Technology Inc | 351.19 | -0.4 | 0 |
| OML.V | Omni Lite Industries Canada Inc | 0.42 | 0.66 | 0.5 |
| TPCS | TechPrecision Corp | 0.19 | 0.87 | 0.76 |
| Low | High | |
| Unlevered beta | 0.06 | 0.46 |
| Relevered beta | 0.09 | 0.61 |
| Adjusted relevered beta | 0.39 | 0.74 |
HIHO'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 HIHO:
cost_of_equity (5.80%) = risk_free_rate (2.85%) + equity_risk_premium (4.70%) * adjusted_beta (0.39) + 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.