HLG WACC - Weighted Average Cost of Capital
The WACC of Hailiang Education Group Inc (HLG) is 7.3%.
| Range | Selected | |
| Cost of equity | 6.2% - 8.5% | 7.35% |
| Tax rate | 23.9% - 25.2% | 24.55% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.1% - 8.5% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.71 | 0.83 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.2% | 8.5% |
| Tax rate | 23.9% | 25.2% |
| Debt/Equity ratio | 0.02 | 0.02 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.1% | 8.5% |
| Selected WACC | 7.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| HLG | Hailiang Education Group Inc | 0.02 | -0.01 | -0.01 |
| AFYA | Afya Ltd | 0.31 | 0.57 | 0.46 |
| ASPU | Aspen Group Inc | 2.45 | 0.56 | 0.2 |
| CLCN | Creative Learning Corp | 0.18 | -0.32 | -0.28 |
| EDTK | Skillful Craftsman Education Technology Ltd | 0.96 | -0.15 | -0.09 |
| EVCI | EVCI Career Colleges Holding Corp | 25.8 | 0.49 | 0.02 |
| LEAI | Legacy Education Alliance Inc | 1723.26 | -2.06 | 0 |
| MBA.TO | CIBT Education Group Inc | 11.24 | 1.19 | 0.13 |
| PCSV | PCS Edventures! Inc | 0.82 | 0.27 | 0.17 |
| VTRU | Vitru Ltd | 1.46 | 0.74 | 0.35 |
| Low | High | |
| Unlevered beta | 0.01 | 0.14 |
| Relevered beta | 0.57 | 0.75 |
| Adjusted relevered beta | 0.71 | 0.83 |
HLG'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 HLG:
cost_of_equity (7.35%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.71) + 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.