1001.HK WACC - Weighted Average Cost of Capital

The WACC of Hong Kong Shanghai Alliance Holdings Ltd (1001.HK) is 5.7%.

The Cost of Equity of Hong Kong Shanghai Alliance Holdings Ltd (1001.HK) is 10.70%.

The Cost of Debt of Hong Kong Shanghai Alliance Holdings Ltd (1001.HK) is 5.80%.

	Range	Selected
Cost of equity	6.30% - 15.10%	10.70%
Tax rate	18.90% - 23.70%	21.30%
Cost of debt	5.10% - 6.50%	5.80%
WACC	4.5% - 6.9%	5.7%

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	0.58	1.61

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.30%	15.10%

Tax rate	18.90%	23.70%
Debt/Equity ratio	4.33	4.33
Cost of debt	5.10%	6.50%

After-tax WACC	4.5%	6.9%


Selected WACC	5.7%

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 (10.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.58) + 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.