1727.HK WACC - Weighted Average Cost of Capital

The WACC of Hebei Construction Group Corp Ltd (1727.HK) is 5.6%.

The Cost of Equity of Hebei Construction Group Corp Ltd (1727.HK) is 24.10%.

The Cost of Debt of Hebei Construction Group Corp Ltd (1727.HK) is 5.00%.

	Range	Selected
Cost of equity	16.40% - 31.80%	24.10%
Tax rate	27.20% - 28.80%	28.00%
Cost of debt	5.00% - 5.00%	5.00%
WACC	4.9% - 6.3%	5.6%

WACC

1727.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	2.27	4

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.40%	31.80%

Tax rate	27.20%	28.80%
Debt/Equity ratio	9.17	9.17
Cost of debt	5.00%	5.00%

After-tax WACC	4.9%	6.3%


Selected WACC	5.6%

1727.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 1727.HK:

cost_of_equity (24.10%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (2.27) + 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.