754.HK WACC - Weighted Average Cost of Capital

The WACC of Hopson Development Holdings Ltd (754.HK) is 8.7%.

The Cost of Equity of Hopson Development Holdings Ltd (754.HK) is 12.95%.

The Cost of Debt of Hopson Development Holdings Ltd (754.HK) is 13.15%.

	Range	Selected
Cost of equity	11.30% - 14.60%	12.95%
Tax rate	34.10% - 40.30%	37.20%
Cost of debt	6.40% - 19.90%	13.15%
WACC	5.1% - 12.2%	8.7%

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	1.4	1.54

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.30%	14.60%

Tax rate	34.10%	40.30%
Debt/Equity ratio	6.86	6.86
Cost of debt	6.40%	19.90%

After-tax WACC	5.1%	12.2%


Selected WACC	8.7%

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 (12.95%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.4) + 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.