1401.HK WACC - Weighted Average Cost of Capital

The WACC of Sprocomm Intelligence Ltd (1401.HK) is 10.5%.

The Cost of Equity of Sprocomm Intelligence Ltd (1401.HK) is 9.75%.

The Cost of Debt of Sprocomm Intelligence Ltd (1401.HK) is 18.40%.

	Range	Selected
Cost of equity	7.80% - 11.70%	9.75%
Tax rate	19.00% - 22.70%	20.85%
Cost of debt	7.00% - 29.80%	18.40%
WACC	7.4% - 13.6%	10.5%

WACC

1401.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.83	1.13

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.80%	11.70%

Tax rate	19.00%	22.70%
Debt/Equity ratio	0.2	0.2
Cost of debt	7.00%	29.80%

After-tax WACC	7.4%	13.6%


Selected WACC	10.5%

1401.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 1401.HK:

cost_of_equity (9.75%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.83) + 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.