1181.HK WACC - Weighted Average Cost of Capital

The WACC of Tang Palace (China) Holdings Ltd (1181.HK) is 6.4%.

The Cost of Equity of Tang Palace (China) Holdings Ltd (1181.HK) is 8.60%.

The Cost of Debt of Tang Palace (China) Holdings Ltd (1181.HK) is 6.10%.

	Range	Selected
Cost of equity	6.50% - 10.70%	8.60%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	5.20% - 7.00%	6.10%
WACC	5.1% - 7.6%	6.4%

WACC

1181.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.6	0.97

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.50%	10.70%

Tax rate	22.10%	22.30%
Debt/Equity ratio	1.37	1.37
Cost of debt	5.20%	7.00%

After-tax WACC	5.1%	7.6%


Selected WACC	6.4%

1181.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 1181.HK:

cost_of_equity (8.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.6) + 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.