1785.HK WACC - Weighted Average Cost of Capital

The WACC of Chengdu Expressway Co Ltd (1785.HK) is 8.1%.

The Cost of Equity of Chengdu Expressway Co Ltd (1785.HK) is 11.35%.

The Cost of Debt of Chengdu Expressway Co Ltd (1785.HK) is 5.00%.

	Range	Selected
Cost of equity	10.00% - 12.70%	11.35%
Tax rate	16.90% - 17.40%	17.15%
Cost of debt	5.00% - 5.00%	5.00%
WACC	7.4% - 8.9%	8.1%

WACC

1785.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.18	1.27

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.00%	12.70%

Tax rate	16.90%	17.40%
Debt/Equity ratio	0.81	0.81
Cost of debt	5.00%	5.00%

After-tax WACC	7.4%	8.9%


Selected WACC	8.1%

1785.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 1785.HK:

cost_of_equity (11.35%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.18) + 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.