1085.HK WACC - Weighted Average Cost of Capital

The WACC of Hengxin Technology Ltd (1085.HK) is 8.6%.

The Cost of Equity of Hengxin Technology Ltd (1085.HK) is 16.45%.

The Cost of Debt of Hengxin Technology Ltd (1085.HK) is 5.25%.

	Range	Selected
Cost of equity	9.60% - 23.30%	16.45%
Tax rate	13.80% - 15.50%	14.65%
Cost of debt	4.60% - 5.90%	5.25%
WACC	5.9% - 11.3%	8.6%

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	1.13	2.79

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.60%	23.30%

Tax rate	13.80%	15.50%
Debt/Equity ratio	1.9	1.9
Cost of debt	4.60%	5.90%

After-tax WACC	5.9%	11.3%


Selected WACC	8.6%

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 (16.45%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.13) + 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.