1971.HK WACC - Weighted Average Cost of Capital

The WACC of Redsun Services Group Ltd (1971.HK) is 11.0%.

The Cost of Equity of Redsun Services Group Ltd (1971.HK) is 9.80%.

The Cost of Debt of Redsun Services Group Ltd (1971.HK) is 28.25%.

	Range	Selected
Cost of equity	8.00% - 11.60%	9.80%
Tax rate	30.10% - 42.80%	36.45%
Cost of debt	4.00% - 52.50%	28.25%
WACC	7.1% - 14.8%	11.0%

WACC

1971.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.86	1.11

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.00%	11.60%

Tax rate	30.10%	42.80%
Debt/Equity ratio	0.21	0.21
Cost of debt	4.00%	52.50%

After-tax WACC	7.1%	14.8%


Selected WACC	11.0%

1971.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 1971.HK:

cost_of_equity (9.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.86) + 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.