1235.HK WACC - Weighted Average Cost of Capital

The WACC of Travel Expert (Asia) Enterprises Ltd (1235.HK) is 7.2%.

The Cost of Equity of Travel Expert (Asia) Enterprises Ltd (1235.HK) is 7.80%.

The Cost of Debt of Travel Expert (Asia) Enterprises Ltd (1235.HK) is 4.30%.

	Range	Selected
Cost of equity	6.70% - 8.90%	7.80%
Tax rate	0.80% - 1.00%	0.90%
Cost of debt	4.10% - 4.50%	4.30%
WACC	6.3% - 8.1%	7.2%

WACC

1235.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.65	0.71

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.70%	8.90%

Tax rate	0.80%	1.00%
Debt/Equity ratio	0.21	0.21
Cost of debt	4.10%	4.50%

After-tax WACC	6.3%	8.1%


Selected WACC	7.2%

1235.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 1235.HK:

cost_of_equity (7.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.65) + 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.