1220.HK WACC - Weighted Average Cost of Capital
The WACC of Zhidao International (Holdings) Ltd (1220.HK) is 5.9%.
| Range | Selected | |
| Cost of equity | 4.9% - 7.0% | 5.95% |
| Tax rate | 2.3% - 4.4% | 3.35% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 4.8% - 7.0% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.33 | 0.45 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.9% | 7.0% |
| Tax rate | 2.3% | 4.4% |
| Debt/Equity ratio | 0.11 | 0.11 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 4.8% | 7.0% |
| Selected WACC | 5.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 1220.HK | Zhidao International (Holdings) Ltd | 0.11 | 0.45 | 0.4 |
| 1315.HK | Vision Fame International Holding Ltd | 2.38 | 0.44 | 0.13 |
| 1592.HK | Anchorstone Holdings Ltd | 0.6 | 0.32 | 0.2 |
| 532766.BO | Richa Industries Ltd | 50.09 | 0.2 | 0 |
| 6182.HK | Twintek Investment Holdings Ltd | 0.22 | -0.38 | -0.31 |
| 8053.HK | Pizu Group Holdings Ltd | 0.37 | -0.11 | -0.08 |
| 8065.HK | KML Technology Group Ltd | 0.16 | 0 | 0 |
| 8262.HK | Super Strong Holdings Ltd | 0.03 | -0.46 | -0.44 |
| 8526.HK | Wing Fung Group Asia Ltd | 1.45 | 0.56 | 0.23 |
| 8535.HK | Vistar Holdings Ltd | 0.43 | 0.44 | 0.31 |
| Low | High | |
| Unlevered beta | 0 | 0.16 |
| Relevered beta | 0 | 0.18 |
| Adjusted relevered beta | 0.33 | 0.45 |
1220.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 1220.HK:
cost_of_equity (5.95%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.33) + 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.