1945.HK WACC - Weighted Average Cost of Capital

The WACC of Zero2ipo Holdings Inc. (1945.HK) is 7.8%.

The Cost of Equity of Zero2ipo Holdings Inc. (1945.HK) is 8.30%.

The Cost of Debt of Zero2ipo Holdings Inc. (1945.HK) is 5.00%.

	Range	Selected
Cost of equity	6.60% - 10.00%	8.30%
Tax rate	22.10% - 25.30%	23.70%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.3% - 9.3%	7.8%

WACC

1945.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.63	0.88

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.60%	10.00%

Tax rate	22.10%	25.30%
Debt/Equity ratio	0.13	0.13
Cost of debt	5.00%	5.00%

After-tax WACC	6.3%	9.3%


Selected WACC	7.8%

1945.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 1945.HK:

cost_of_equity (8.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.63) + 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.