1001.HK WACC - Weighted Average Cost of Capital

The WACC of Hong Kong Shanghai Alliance Holdings Ltd (1001.HK) is 6.3%.

The Cost of Equity of Hong Kong Shanghai Alliance Holdings Ltd (1001.HK) is 13.60%.

The Cost of Debt of Hong Kong Shanghai Alliance Holdings Ltd (1001.HK) is 5.70%.

	Range	Selected
Cost of equity	5.80% - 21.40%	13.60%
Tax rate	11.30% - 16.60%	13.95%
Cost of debt	4.90% - 6.50%	5.70%
WACC	4.6% - 7.9%	6.3%

WACC

1001.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.49	2.51

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.80%	21.40%

Tax rate	11.30%	16.60%
Debt/Equity ratio	5.33	5.33
Cost of debt	4.90%	6.50%

After-tax WACC	4.6%	7.9%


Selected WACC	6.3%

1001.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 1001.HK:

cost_of_equity (13.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.49) + 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.