1720.HK WACC - Weighted Average Cost of Capital

The WACC of Putian Communication Group Ltd (1720.HK) is 5.6%.

The Cost of Equity of Putian Communication Group Ltd (1720.HK) is 9.50%.

The Cost of Debt of Putian Communication Group Ltd (1720.HK) is 5.25%.

	Range	Selected
Cost of equity	8.30% - 10.70%	9.50%
Tax rate	20.90% - 22.40%	21.65%
Cost of debt	4.00% - 6.50%	5.25%
WACC	4.5% - 6.6%	5.6%

WACC

1720.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.9	0.99

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.30%	10.70%

Tax rate	20.90%	22.40%
Debt/Equity ratio	2.72	2.72
Cost of debt	4.00%	6.50%

After-tax WACC	4.5%	6.6%


Selected WACC	5.6%

1720.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 1720.HK:

cost_of_equity (9.50%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.9) + 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.