896.HK WACC - Weighted Average Cost of Capital

The WACC of Hanison Construction Holdings Ltd (896.HK) is 7.3%.

The Cost of Equity of Hanison Construction Holdings Ltd (896.HK) is 20.75%.

The Cost of Debt of Hanison Construction Holdings Ltd (896.HK) is 5.55%.

	Range	Selected
Cost of equity	7.50% - 34.00%	20.75%
Tax rate	0.40% - 2.50%	1.45%
Cost of debt	4.10% - 7.00%	5.55%
WACC	4.5% - 10.1%	7.3%

WACC

896.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.78	4.31

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.50%	34.00%

Tax rate	0.40%	2.50%
Debt/Equity ratio	7.28	7.28
Cost of debt	4.10%	7.00%

After-tax WACC	4.5%	10.1%


Selected WACC	7.3%

896.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 896.HK:

cost_of_equity (20.75%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.78) + 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.