1502.HK WACC - Weighted Average Cost of Capital

The WACC of Financial Street Property Co Ltd (1502.HK) is 12.5%.

The Cost of Equity of Financial Street Property Co Ltd (1502.HK) is 10.05%.

The Cost of Debt of Financial Street Property Co Ltd (1502.HK) is 53.95%.

	Range	Selected
Cost of equity	8.60% - 11.50%	10.05%
Tax rate	25.80% - 26.30%	26.05%
Cost of debt	6.50% - 101.40%	53.95%
WACC	8.2% - 16.8%	12.5%

WACC

1502.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.95	1.09

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.60%	11.50%

Tax rate	25.80%	26.30%
Debt/Equity ratio	0.09	0.09
Cost of debt	6.50%	101.40%

After-tax WACC	8.2%	16.8%


Selected WACC	12.5%

1502.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 1502.HK:

cost_of_equity (10.05%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.95) + 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.