873.HK WACC - Weighted Average Cost of Capital

The WACC of Shimao Services Holdings Ltd (873.HK) is 11.4%.

The Cost of Equity of Shimao Services Holdings Ltd (873.HK) is 7.05%.

The Cost of Debt of Shimao Services Holdings Ltd (873.HK) is 30.15%.

	Range	Selected
Cost of equity	5.90% - 8.20%	7.05%
Tax rate	18.50% - 19.20%	18.85%
Cost of debt	4.00% - 56.30%	30.15%
WACC	5.2% - 17.6%	11.4%

WACC

873.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.51	0.62

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.90%	8.20%

Tax rate	18.50%	19.20%
Debt/Equity ratio	0.34	0.34
Cost of debt	4.00%	56.30%

After-tax WACC	5.2%	17.6%


Selected WACC	11.4%

873.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 873.HK:

cost_of_equity (7.05%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.51) + 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.