1238.HK WACC - Weighted Average Cost of Capital

The WACC of Powerlong Real Estate Holdings Ltd (1238.HK) is 10.2%.

The Cost of Equity of Powerlong Real Estate Holdings Ltd (1238.HK) is 40.80%.

The Cost of Debt of Powerlong Real Estate Holdings Ltd (1238.HK) is 14.75%.

	Range	Selected
Cost of equity	32.60% - 49.00%	40.80%
Tax rate	32.80% - 36.00%	34.40%
Cost of debt	6.60% - 22.90%	14.75%
WACC	5.0% - 15.4%	10.2%

WACC

1238.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	4.98	6.46

Additional risk adjustments	0.0%	0.5%
Cost of equity	32.60%	49.00%

Tax rate	32.80%	36.00%
Debt/Equity ratio	45.37	45.37
Cost of debt	6.60%	22.90%

After-tax WACC	5.0%	15.4%


Selected WACC	10.2%

1238.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 1238.HK:

cost_of_equity (40.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (4.98) + 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.