1085.HK WACC - Weighted Average Cost of Capital

The WACC of Hengxin Technology Ltd (1085.HK) is 8.7%.

The Cost of Equity of Hengxin Technology Ltd (1085.HK) is 16.30%.

The Cost of Debt of Hengxin Technology Ltd (1085.HK) is 7.35%.

	Range	Selected
Cost of equity	11.30% - 21.30%	16.30%
Tax rate	16.00% - 17.20%	16.60%
Cost of debt	6.60% - 8.10%	7.35%
WACC	7.0% - 10.4%	8.7%

WACC

1085.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.4	2.49

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.30%	21.30%

Tax rate	16.00%	17.20%
Debt/Equity ratio	2.91	2.91
Cost of debt	6.60%	8.10%

After-tax WACC	7.0%	10.4%


Selected WACC	8.7%

1085.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 1085.HK:

cost_of_equity (16.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.4) + 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.