1742.HK WACC - Weighted Average Cost of Capital

The WACC of HPC Holdings Ltd (1742.HK) is 6.6%.

The Cost of Equity of HPC Holdings Ltd (1742.HK) is 8.05%.

The Cost of Debt of HPC Holdings Ltd (1742.HK) is 5.50%.

	Range	Selected
Cost of equity	5.30% - 10.80%	8.05%
Tax rate	15.60% - 20.40%	18.00%
Cost of debt	4.00% - 7.00%	5.50%
WACC	4.5% - 8.7%	6.6%

WACC

1742.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.41	1

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.30%	10.80%

Tax rate	15.60%	20.40%
Debt/Equity ratio	0.7	0.7
Cost of debt	4.00%	7.00%

After-tax WACC	4.5%	8.7%


Selected WACC	6.6%

1742.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 1742.HK:

cost_of_equity (8.05%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.41) + 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.