H78.SI WACC - Weighted Average Cost of Capital

The WACC of Hongkong Land Holdings Ltd (H78.SI) is 5.3%.

The Cost of Equity of Hongkong Land Holdings Ltd (H78.SI) is 6.60%.

The Cost of Debt of Hongkong Land Holdings Ltd (H78.SI) is 4.25%.

	Range	Selected
Cost of equity	5.30% - 7.90%	6.60%
Tax rate	22.90% - 33.20%	28.05%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.5% - 6.2%	5.3%

WACC

H78.SI WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.56	0.75

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.30%	7.90%

Tax rate	22.90%	33.20%
Debt/Equity ratio	0.54	0.54
Cost of debt	4.00%	4.50%

After-tax WACC	4.5%	6.2%


Selected WACC	5.3%

H78.SI'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 H78.SI:

cost_of_equity (6.60%) = risk_free_rate (2.95%) + equity_risk_premium (5.10%) * adjusted_beta (0.56) + 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.