1305.HK WACC - Weighted Average Cost of Capital

The WACC of Wai Chi Holdings Co Ltd (1305.HK) is 12.0%.

The Cost of Equity of Wai Chi Holdings Co Ltd (1305.HK) is 9.10%.

The Cost of Debt of Wai Chi Holdings Co Ltd (1305.HK) is 13.60%.

	Range	Selected
Cost of equity	6.20% - 12.00%	9.10%
Tax rate	0.90% - 2.90%	1.90%
Cost of debt	12.60% - 14.60%	13.60%
WACC	10.6% - 13.5%	12.0%

WACC

1305.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.56	1.17

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.20%	12.00%

Tax rate	0.90%	2.90%
Debt/Equity ratio	2.19	2.19
Cost of debt	12.60%	14.60%

After-tax WACC	10.6%	13.5%


Selected WACC	12.0%

1305.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 1305.HK:

cost_of_equity (9.10%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.56) + 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.