1559.HK WACC - Weighted Average Cost of Capital

The WACC of Kwan On Holdings Ltd (1559.HK) is 5.9%.

The Cost of Equity of Kwan On Holdings Ltd (1559.HK) is 5.75%.

The Cost of Debt of Kwan On Holdings Ltd (1559.HK) is 6.45%.

	Range	Selected
Cost of equity	4.80% - 6.70%	5.75%
Tax rate	3.20% - 5.90%	4.55%
Cost of debt	5.90% - 7.00%	6.45%
WACC	5.1% - 6.6%	5.9%

WACC

1559.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.24	0.33

Additional risk adjustments	0.5%	1.0%
Cost of equity	4.80%	6.70%

Tax rate	3.20%	5.90%
Debt/Equity ratio	0.51	0.51
Cost of debt	5.90%	7.00%

After-tax WACC	5.1%	6.6%


Selected WACC	5.9%

1559.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 1559.HK:

cost_of_equity (5.75%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.24) + risk_adjustments (0.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.