1420.HK WACC - Weighted Average Cost of Capital

The WACC of Chuan Holdings Ltd (1420.HK) is 6.7%.

The Cost of Equity of Chuan Holdings Ltd (1420.HK) is 12.20%.

The Cost of Debt of Chuan Holdings Ltd (1420.HK) is 5.70%.

	Range	Selected
Cost of equity	9.00% - 15.40%	12.20%
Tax rate	24.00% - 28.00%	26.00%
Cost of debt	4.00% - 7.40%	5.70%
WACC	4.9% - 8.5%	6.7%

WACC

1420.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.03	1.65

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.00%	15.40%

Tax rate	24.00%	28.00%
Debt/Equity ratio	2.21	2.21
Cost of debt	4.00%	7.40%

After-tax WACC	4.9%	8.5%


Selected WACC	6.7%

1420.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 1420.HK:

cost_of_equity (12.20%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.03) + 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.