754.HK WACC - Weighted Average Cost of Capital

The WACC of Hopson Development Holdings Ltd (754.HK) is 6.6%.

The Cost of Equity of Hopson Development Holdings Ltd (754.HK) is 8.25%.

The Cost of Debt of Hopson Development Holdings Ltd (754.HK) is 10.30%.

	Range	Selected
Cost of equity	6.70% - 9.80%	8.25%
Tax rate	34.10% - 40.30%	37.20%
Cost of debt	6.00% - 14.60%	10.30%
WACC	4.3% - 8.9%	6.6%

WACC

754.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.64	0.85

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.70%	9.80%

Tax rate	34.10%	40.30%
Debt/Equity ratio	6.61	6.61
Cost of debt	6.00%	14.60%

After-tax WACC	4.3%	8.9%


Selected WACC	6.6%

754.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 754.HK:

cost_of_equity (8.25%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.64) + 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.