The WACC of Henderson Land Development Co Ltd (12.HK) is 8.8%.
Range | Selected | |
Cost of equity | 5.2% - 8.0% | 6.6% |
Tax rate | 11.7% - 12.4% | 12.05% |
Cost of debt | 4.0% - 19.9% | 11.95% |
WACC | 4.3% - 13.3% | 8.8% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.39 | 0.6 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.2% | 8.0% |
Tax rate | 11.7% | 12.4% |
Debt/Equity ratio | 1.29 | 1.29 |
Cost of debt | 4.0% | 19.9% |
After-tax WACC | 4.3% | 13.3% |
Selected WACC | 8.8% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
12.HK | Henderson Land Development Co Ltd | 1.29 | 0.55 | 0.26 |
1113.HK | CK Asset Holdings Ltd | 0.51 | 0.67 | 0.46 |
124.HK | Guangdong Land Holdings Ltd | 58.3 | 0.82 | 0.02 |
1240.HK | CNQC International Holdings Ltd | 22.95 | 0.22 | 0.01 |
185.HK | Zensun Enterprises Ltd | 105.08 | 0.13 | 0 |
1908.HK | C&D International Investment Group Ltd | 3.42 | 1.36 | 0.34 |
247.HK | Tsim Sha Tsui Properties Ltd | 0.04 | 0.14 | 0.14 |
2768.HK | Jiayuan International Group Ltd | 21.06 | 1.09 | 0.06 |
754.HK | Hopson Development Holdings Ltd | 6.61 | 1.74 | 0.26 |
845.HK | Glorious Property Holdings Ltd | 316.75 | 1.36 | 0 |
Low | High | |
Unlevered beta | 0.04 | 0.19 |
Relevered beta | 0.09 | 0.4 |
Adjusted relevered beta | 0.39 | 0.6 |
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 (6.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.39) + 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.