1615.HK WACC - Weighted Average Cost of Capital

The WACC of Ab Builders Group Ltd (1615.HK) is 7.2%.

The Cost of Equity of Ab Builders Group Ltd (1615.HK) is 6.80%.

The Cost of Debt of Ab Builders Group Ltd (1615.HK) is 14.60%.

	Range	Selected
Cost of equity	5.40% - 8.20%	6.80%
Tax rate	3.00% - 4.70%	3.85%
Cost of debt	14.60% - 14.60%	14.60%
WACC	5.9% - 8.5%	7.2%

WACC

1615.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.42	0.62

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.40%	8.20%

Tax rate	3.00%	4.70%
Debt/Equity ratio	0.06	0.06
Cost of debt	14.60%	14.60%

After-tax WACC	5.9%	8.5%


Selected WACC	7.2%

1615.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 1615.HK:

cost_of_equity (6.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.42) + 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.