1617.HK WACC - Weighted Average Cost of Capital

The WACC of Nanfang Communication Holdings Ltd (1617.HK) is 6.3%.

The Cost of Equity of Nanfang Communication Holdings Ltd (1617.HK) is 11.30%.

The Cost of Debt of Nanfang Communication Holdings Ltd (1617.HK) is 5.00%.

	Range	Selected
Cost of equity	9.00% - 13.60%	11.30%
Tax rate	19.70% - 30.00%	24.85%
Cost of debt	4.00% - 6.00%	5.00%
WACC	5.2% - 7.4%	6.3%

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	1.03	1.39

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.00%	13.60%

Tax rate	19.70%	30.00%
Debt/Equity ratio	1.92	1.92
Cost of debt	4.00%	6.00%

After-tax WACC	5.2%	7.4%


Selected WACC	6.3%

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 (11.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.03) + 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.