1538.HK WACC - Weighted Average Cost of Capital

The WACC of Zhong Ao Home Group Ltd (1538.HK) is 8.9%.

The Cost of Equity of Zhong Ao Home Group Ltd (1538.HK) is 10.30%.

The Cost of Debt of Zhong Ao Home Group Ltd (1538.HK) is 4.25%.

	Range	Selected
Cost of equity	8.70% - 11.90%	10.30%
Tax rate	31.90% - 32.70%	32.30%
Cost of debt	4.00% - 4.50%	4.25%
WACC	7.6% - 10.2%	8.9%

WACC

1538.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.98	1.16

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.70%	11.90%

Tax rate	31.90%	32.70%
Debt/Equity ratio	0.24	0.24
Cost of debt	4.00%	4.50%

After-tax WACC	7.6%	10.2%


Selected WACC	8.9%

1538.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 1538.HK:

cost_of_equity (10.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.98) + 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.