1850.HK WACC - Weighted Average Cost of Capital

The WACC of WINDMILL Group Ltd (1850.HK) is 4.6%.

The Cost of Equity of WINDMILL Group Ltd (1850.HK) is 6.40%.

The Cost of Debt of WINDMILL Group Ltd (1850.HK) is 4.50%.

	Range	Selected
Cost of equity	5.00% - 7.80%	6.40%
Tax rate	16.50% - 23.00%	19.75%
Cost of debt	4.10% - 4.90%	4.50%
WACC	4.0% - 5.2%	4.6%

WACC

1850.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.36	0.56

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.00%	7.80%

Tax rate	16.50%	23.00%
Debt/Equity ratio	1.83	1.83
Cost of debt	4.10%	4.90%

After-tax WACC	4.0%	5.2%


Selected WACC	4.6%

1850.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 1850.HK:

cost_of_equity (6.40%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.36) + 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.