1420.HK WACC - Weighted Average Cost of Capital

The WACC of Chuan Holdings Ltd (1420.HK) is 6.6%.

The Cost of Equity of Chuan Holdings Ltd (1420.HK) is 10.20%.

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

	Range	Selected
Cost of equity	8.00% - 12.40%	10.20%
Tax rate	24.00% - 28.00%	26.00%
Cost of debt	4.00% - 7.40%	5.70%
WACC	5.0% - 8.1%	6.6%

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	0.86	1.22

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.00%	12.40%

Tax rate	24.00%	28.00%
Debt/Equity ratio	1.54	1.54
Cost of debt	4.00%	7.40%

After-tax WACC	5.0%	8.1%


Selected WACC	6.6%

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 (10.20%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.86) + 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.