The WACC of New Century Real Estate Investment Trust (1275.HK) is 8.2%.
Range | Selected | |
Cost of equity | 8.5% - 11.3% | 9.9% |
Tax rate | 22.5% - 22.6% | 22.55% |
Cost of debt | 4.0% - 13.0% | 8.5% |
WACC | 5.7% - 10.7% | 8.2% |
Category | Low | High |
Long-term bond rate | 3.0% | 3.5% |
Equity market risk premium | 5.3% | 6.3% |
Adjusted beta | 1.02 | 1.15 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.5% | 11.3% |
Tax rate | 22.5% | 22.6% |
Debt/Equity ratio | 1.05 | 1.05 |
Cost of debt | 4.0% | 13.0% |
After-tax WACC | 5.7% | 10.7% |
Selected WACC | 8.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
1275.HK | New Century Real Estate Investment Trust | 1.05 | 0.85 | 0.47 |
1881.HK | Regal Real Estate Investment Trust | 6.88 | 0.3 | 0.05 |
3287.T | Hoshino Resorts REIT Inc | 0.67 | 0.52 | 0.34 |
3463.T | Ichigo Hotel REIT Investment Corp | 0.78 | 0.37 | 0.23 |
3472.T | Ooedo Onsen Reit Investment Corp | 0.59 | 0.4 | 0.27 |
8985.T | Japan Hotel Reit Investment Corp | 0.53 | 0.45 | 0.32 |
ACV.SI | Frasers Hospitality Trust | 0.55 | 1.49 | 1.04 |
J85.SI | CDL Hospitality Trusts | 1.46 | 1.5 | 0.7 |
LHHOTEL.BK | LH Hotel Leasehold Real Estate Investment Trust | 0.86 | 0.53 | 0.32 |
YTLREIT.KL | YTL Hospitality REIT | 1.25 | 0.39 | 0.2 |
Low | High | |
Unlevered beta | 0.3 | 0.33 |
Relevered beta | 1.03 | 1.22 |
Adjusted relevered beta | 1.02 | 1.15 |
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 1275.HK:
cost_of_equity (9.90%) = risk_free_rate (3.25%) + equity_risk_premium (5.80%) * adjusted_beta (1.02) + 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.