8.HK WACC - Weighted Average Cost of Capital

The WACC of PCCW Ltd (8.HK) is 5.9%.

The Cost of Equity of PCCW Ltd (8.HK) is 8.60%.

The Cost of Debt of PCCW Ltd (8.HK) is 5.25%.

	Range	Selected
Cost of equity	6.30% - 10.90%	8.60%
Tax rate	26.30% - 28.10%	27.20%
Cost of debt	4.00% - 6.50%	5.25%
WACC	4.4% - 7.4%	5.9%

WACC

8.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.58	1

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.30%	10.90%

Tax rate	26.30%	28.10%
Debt/Equity ratio	1.28	1.28
Cost of debt	4.00%	6.50%

After-tax WACC	4.4%	7.4%


Selected WACC	5.9%

8.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 8.HK:

cost_of_equity (8.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.58) + 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.