1198.HK WACC - Weighted Average Cost of Capital

The WACC of Royale Home Holdings Ltd (1198.HK) is 5.4%.

The Cost of Equity of Royale Home Holdings Ltd (1198.HK) is 7.45%.

The Cost of Debt of Royale Home Holdings Ltd (1198.HK) is 6.65%.

	Range	Selected
Cost of equity	5.20% - 9.70%	7.45%
Tax rate	22.80% - 27.90%	25.35%
Cost of debt	6.30% - 7.00%	6.65%
WACC	4.9% - 5.9%	5.4%

WACC

1198.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.13	0.62

Additional risk adjustments	1.5%	2.0%
Cost of equity	5.20%	9.70%

Tax rate	22.80%	27.90%
Debt/Equity ratio	4.33	4.33
Cost of debt	6.30%	7.00%

After-tax WACC	4.9%	5.9%


Selected WACC	5.4%

1198.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 1198.HK:

cost_of_equity (7.45%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.13) + risk_adjustments (1.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.