1158.HK WACC - Weighted Average Cost of Capital

The WACC of Zhejiang New Century Hotel Management Co Ltd (1158.HK) is 9.4%.

The Cost of Equity of Zhejiang New Century Hotel Management Co Ltd (1158.HK) is 9.30%.

The Cost of Debt of Zhejiang New Century Hotel Management Co Ltd (1158.HK) is 12.90%.

	Range	Selected
Cost of equity	8.20% - 10.40%	9.30%
Tax rate	24.70% - 26.50%	25.60%
Cost of debt	7.90% - 17.90%	12.90%
WACC	7.4% - 11.4%	9.4%

WACC

1158.HK WACC calculation

Category	Low	High

Long-term bond rate	3.0%	3.5%
Equity market risk premium	5.3%	6.3%
Adjusted beta	0.96	1.01

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.20%	10.40%

Tax rate	24.70%	26.50%
Debt/Equity ratio	0.52	0.52
Cost of debt	7.90%	17.90%

After-tax WACC	7.4%	11.4%


Selected WACC	9.4%

1158.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 1158.HK:

cost_of_equity (9.30%) = risk_free_rate (3.25%) + equity_risk_premium (5.80%) * adjusted_beta (0.96) + 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.