880.HK WACC - Weighted Average Cost of Capital

The WACC of SJM Holdings Ltd (880.HK) is 11.2%.

The Cost of Equity of SJM Holdings Ltd (880.HK) is 10.05%.

The Cost of Debt of SJM Holdings Ltd (880.HK) is 12.60%.

	Range	Selected
Cost of equity	6.90% - 13.20%	10.05%
Tax rate	1.50% - 8.20%	4.85%
Cost of debt	5.30% - 19.90%	12.60%
WACC	5.7% - 16.7%	11.2%

WACC

880.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.67	1.33

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	13.20%

Tax rate	1.50%	8.20%
Debt/Equity ratio	2.23	2.23
Cost of debt	5.30%	19.90%

After-tax WACC	5.7%	16.7%


Selected WACC	11.2%

880.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 880.HK:

cost_of_equity (10.05%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.67) + 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.