TME
Tencent Music Entertainment Group
Price:  
14.31 
USD
Volume:  
6,477,172.00
China | Entertainment
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TME WACC - Weighted Average Cost of Capital

The WACC of Tencent Music Entertainment Group (TME) is 7.3%.

The Cost of Equity of Tencent Music Entertainment Group (TME) is 7.45%.
The Cost of Debt of Tencent Music Entertainment Group (TME) is 5.00%.

Range Selected
Cost of equity 6.50% - 8.40% 7.45%
Tax rate 11.90% - 12.80% 12.35%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.4% - 8.3% 7.3%
WACC

TME WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.57 0.64
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.50% 8.40%
Tax rate 11.90% 12.80%
Debt/Equity ratio 0.04 0.04
Cost of debt 5.00% 5.00%
After-tax WACC 6.4% 8.3%
Selected WACC 7.3%

TME'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 TME:

cost_of_equity (7.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.57) + 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.