1945.HK WACC - Weighted Average Cost of Capital

The WACC of Zero2ipo Holdings Inc. (1945.HK) is 8.2%.

The Cost of Equity of Zero2ipo Holdings Inc. (1945.HK) is 9.15%.

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

	Range	Selected
Cost of equity	7.30% - 11.00%	9.15%
Tax rate	22.10% - 25.30%	23.70%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.7% - 9.7%	8.2%

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	0.74	1.02

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.30%	11.00%

Tax rate	22.10%	25.30%
Debt/Equity ratio	0.22	0.22
Cost of debt	5.00%	5.00%

After-tax WACC	6.7%	9.7%


Selected WACC	8.2%

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 (9.15%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.74) + 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.