1701.HK WACC - Weighted Average Cost of Capital

The WACC of Tu Yi Holding Co Ltd (1701.HK) is 8.9%.

The Cost of Equity of Tu Yi Holding Co Ltd (1701.HK) is 12.00%.

The Cost of Debt of Tu Yi Holding Co Ltd (1701.HK) is 4.25%.

	Range	Selected
Cost of equity	10.60% - 13.40%	12.00%
Tax rate	11.40% - 16.90%	14.15%
Cost of debt	4.00% - 4.50%	4.25%
WACC	8.0% - 9.8%	8.9%

WACC

1701.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.3	1.37

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.60%	13.40%

Tax rate	11.40%	16.90%
Debt/Equity ratio	0.61	0.61
Cost of debt	4.00%	4.50%

After-tax WACC	8.0%	9.8%


Selected WACC	8.9%

1701.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 1701.HK:

cost_of_equity (12.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.3) + 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.