10.HK WACC - Weighted Average Cost of Capital

The WACC of Hang Lung Group Ltd (10.HK) is 4.4%.

The Cost of Equity of Hang Lung Group Ltd (10.HK) is 8.45%.

The Cost of Debt of Hang Lung Group Ltd (10.HK) is 4.55%.

	Range	Selected
Cost of equity	6.50% - 10.40%	8.45%
Tax rate	28.20% - 31.40%	29.80%
Cost of debt	4.00% - 5.10%	4.55%
WACC	3.7% - 5.1%	4.4%

WACC

10.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.61	0.93

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.50%	10.40%

Tax rate	28.20%	31.40%
Debt/Equity ratio	3.32	3.32
Cost of debt	4.00%	5.10%

After-tax WACC	3.7%	5.1%


Selected WACC	4.4%

10.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 10.HK:

cost_of_equity (8.45%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.61) + 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.