1107.HK WACC - Weighted Average Cost of Capital

The WACC of Modern Land (China) Co Ltd (1107.HK) is 6.3%.

The Cost of Equity of Modern Land (China) Co Ltd (1107.HK) is 70.80%.

The Cost of Debt of Modern Land (China) Co Ltd (1107.HK) is 7.90%.

	Range	Selected
Cost of equity	21.40% - 120.20%	70.80%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	7.00% - 8.80%	7.90%
WACC	5.5% - 7.1%	6.3%

WACC

1107.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	3.1	16.67

Additional risk adjustments	0.0%	0.5%
Cost of equity	21.40%	120.20%

Tax rate	22.10%	22.30%
Debt/Equity ratio	405.78	405.78
Cost of debt	7.00%	8.80%

After-tax WACC	5.5%	7.1%


Selected WACC	6.3%

1107.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 1107.HK:

cost_of_equity (70.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (3.1) + 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.