66.HK WACC - Weighted Average Cost of Capital

The WACC of MTR Corp Ltd (66.HK) is 7.0%.

The Cost of Equity of MTR Corp Ltd (66.HK) is 8.85%.

The Cost of Debt of MTR Corp Ltd (66.HK) is 4.25%.

	Range	Selected
Cost of equity	7.30% - 10.40%	8.85%
Tax rate	17.10% - 18.20%	17.65%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.9% - 8.1%	7.0%

WACC

66.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.74	0.93

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.30%	10.40%

Tax rate	17.10%	18.20%
Debt/Equity ratio	0.51	0.51
Cost of debt	4.00%	4.50%

After-tax WACC	5.9%	8.1%


Selected WACC	7.0%

66.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 66.HK:

cost_of_equity (8.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.74) + 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.