1622.HK WACC - Weighted Average Cost of Capital

The WACC of Redco Properties Group Ltd (1622.HK) is 3.7%.

The Cost of Equity of Redco Properties Group Ltd (1622.HK) is 7.25%.

The Cost of Debt of Redco Properties Group Ltd (1622.HK) is 4.90%.

	Range	Selected
Cost of equity	5.90% - 8.60%	7.25%
Tax rate	21.80% - 33.20%	27.50%
Cost of debt	4.90% - 4.90%	4.90%
WACC	3.9% - 3.5%	3.7%

WACC

1622.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.5	0.68

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.90%	8.60%

Tax rate	21.80%	33.20%
Debt/Equity ratio	35.47	35.47
Cost of debt	4.90%	4.90%

After-tax WACC	3.9%	3.5%


Selected WACC	3.7%

1622.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 1622.HK:

cost_of_equity (7.25%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.5) + 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.