1001.HK WACC - Weighted Average Cost of Capital

The WACC of Hong Kong Shanghai Alliance Holdings Ltd (1001.HK) is 5.5%.

The Cost of Equity of Hong Kong Shanghai Alliance Holdings Ltd (1001.HK) is 10.85%.

The Cost of Debt of Hong Kong Shanghai Alliance Holdings Ltd (1001.HK) is 5.60%.

	Range	Selected
Cost of equity	6.70% - 15.00%	10.85%
Tax rate	18.90% - 23.70%	21.30%
Cost of debt	5.20% - 6.00%	5.60%
WACC	4.6% - 6.4%	5.5%

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	0.63	1.59

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.70%	15.00%

Tax rate	18.90%	23.70%
Debt/Equity ratio	4.72	4.72
Cost of debt	5.20%	6.00%

After-tax WACC	4.6%	6.4%


Selected WACC	5.5%

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 (10.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.63) + 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.