535.HK WACC - Weighted Average Cost of Capital

The WACC of Gemdale Properties and Investment Corporation Ltd (535.HK) is 6.5%.

The Cost of Equity of Gemdale Properties and Investment Corporation Ltd (535.HK) is 7.85%.

The Cost of Debt of Gemdale Properties and Investment Corporation Ltd (535.HK) is 9.10%.

	Range	Selected
Cost of equity	6.50% - 9.20%	7.85%
Tax rate	29.00% - 32.70%	30.85%
Cost of debt	7.00% - 11.20%	9.10%
WACC	5.3% - 7.8%	6.5%

WACC

535.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.61	0.76

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.50%	9.20%

Tax rate	29.00%	32.70%
Debt/Equity ratio	4.33	4.33
Cost of debt	7.00%	11.20%

After-tax WACC	5.3%	7.8%


Selected WACC	6.5%

535.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 535.HK:

cost_of_equity (7.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.61) + 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.