12.HK WACC - Weighted Average Cost of Capital

The WACC of Henderson Land Development Co Ltd (12.HK) is 8.9%.

The Cost of Equity of Henderson Land Development Co Ltd (12.HK) is 6.65%.

The Cost of Debt of Henderson Land Development Co Ltd (12.HK) is 11.95%.

	Range	Selected
Cost of equity	5.20% - 8.10%	6.65%
Tax rate	11.70% - 12.40%	12.05%
Cost of debt	4.00% - 19.90%	11.95%
WACC	4.2% - 13.6%	8.9%

WACC

12.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.4	0.61

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.20%	8.10%

Tax rate	11.70%	12.40%
Debt/Equity ratio	1.42	1.42
Cost of debt	4.00%	19.90%

After-tax WACC	4.2%	13.6%


Selected WACC	8.9%

12.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 12.HK:

cost_of_equity (6.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.4) + 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.