432.HK WACC - Weighted Average Cost of Capital

The WACC of Pacific Century Premium Developments Ltd (432.HK) is 12.4%.

The Cost of Equity of Pacific Century Premium Developments Ltd (432.HK) is 7.40%.

The Cost of Debt of Pacific Century Premium Developments Ltd (432.HK) is 13.85%.

	Range	Selected
Cost of equity	4.30% - 10.50%	7.40%
Tax rate	6.20% - 8.00%	7.10%
Cost of debt	4.80% - 22.90%	13.85%
WACC	4.5% - 20.4%	12.4%

WACC

432.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	-0.34	0.45

Additional risk adjustments	3.5%	4.0%
Cost of equity	4.30%	10.50%

Tax rate	6.20%	8.00%
Debt/Equity ratio	15.58	15.58
Cost of debt	4.80%	22.90%

After-tax WACC	4.5%	20.4%


Selected WACC	12.4%

432.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 432.HK:

cost_of_equity (7.40%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (-0.34) + risk_adjustments (3.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.