1425.HK WACC - Weighted Average Cost of Capital

The WACC of Justin Allen Holdings Ltd (1425.HK) is 8.7%.

The Cost of Equity of Justin Allen Holdings Ltd (1425.HK) is 7.50%.

The Cost of Debt of Justin Allen Holdings Ltd (1425.HK) is 56.75%.

	Range	Selected
Cost of equity	5.50% - 9.50%	7.50%
Tax rate	18.70% - 19.40%	19.05%
Cost of debt	4.00% - 109.50%	56.75%
WACC	5.4% - 12.0%	8.7%

WACC

1425.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.44	0.81

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.50%	9.50%

Tax rate	18.70%	19.40%
Debt/Equity ratio	0.03	0.03
Cost of debt	4.00%	109.50%

After-tax WACC	5.4%	12.0%


Selected WACC	8.7%

1425.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 1425.HK:

cost_of_equity (7.50%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.44) + 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.