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 6.45%.

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

	Range	Selected
Cost of equity	5.40% - 7.50%	6.45%
Tax rate	6.20% - 8.00%	7.10%
Cost of debt	4.80% - 22.90%	13.85%
WACC	4.5% - 20.3%	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	0.42	0.52

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.40%	7.50%

Tax rate	6.20%	8.00%
Debt/Equity ratio	17.38	17.38
Cost of debt	4.80%	22.90%

After-tax WACC	4.5%	20.3%


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 (6.45%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.42) + 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.