655.HK WACC - Weighted Average Cost of Capital

The WACC of Hongkong Chinese Ltd (655.HK) is 10.7%.

The Cost of Equity of Hongkong Chinese Ltd (655.HK) is 6.60%.

The Cost of Debt of Hongkong Chinese Ltd (655.HK) is 14.60%.

	Range	Selected
Cost of equity	5.50% - 7.70%	6.60%
Tax rate	0.90% - 1.30%	1.10%
Cost of debt	14.60% - 14.60%	14.60%
WACC	10.2% - 11.2%	10.7%

WACC

655.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.44	0.55

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.50%	7.70%

Tax rate	0.90%	1.30%
Debt/Equity ratio	1.1	1.1
Cost of debt	14.60%	14.60%

After-tax WACC	10.2%	11.2%


Selected WACC	10.7%

655.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 655.HK:

cost_of_equity (6.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.44) + 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.