34.HK WACC - Weighted Average Cost of Capital

The WACC of Kowloon Development Co Ltd (34.HK) is 9.3%.

The Cost of Equity of Kowloon Development Co Ltd (34.HK) is 5.95%.

The Cost of Debt of Kowloon Development Co Ltd (34.HK) is 13.45%.

	Range	Selected
Cost of equity	5.20% - 6.70%	5.95%
Tax rate	21.80% - 27.10%	24.45%
Cost of debt	4.00% - 22.90%	13.45%
WACC	3.5% - 15.1%	9.3%

WACC

34.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.38	0.41

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.20%	6.70%

Tax rate	21.80%	27.10%
Debt/Equity ratio	5.26	5.26
Cost of debt	4.00%	22.90%

After-tax WACC	3.5%	15.1%


Selected WACC	9.3%

34.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 34.HK:

cost_of_equity (5.95%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.38) + 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.