1617.HK WACC - Weighted Average Cost of Capital

The WACC of Nanfang Communication Holdings Ltd (1617.HK) is 7.4%.

The Cost of Equity of Nanfang Communication Holdings Ltd (1617.HK) is 9.85%.

The Cost of Debt of Nanfang Communication Holdings Ltd (1617.HK) is 4.25%.

	Range	Selected
Cost of equity	7.70% - 12.00%	9.85%
Tax rate	13.30% - 24.90%	19.10%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.1% - 8.6%	7.4%

WACC

1617.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.8	1.16

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.70%	12.00%

Tax rate	13.30%	24.90%
Debt/Equity ratio	0.63	0.63
Cost of debt	4.00%	4.50%

After-tax WACC	6.1%	8.6%


Selected WACC	7.4%

1617.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 1617.HK:

cost_of_equity (9.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.8) + 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.