10.HK WACC - Weighted Average Cost of Capital

The WACC of Hang Lung Group Ltd (10.HK) is 5.1%.

The Cost of Equity of Hang Lung Group Ltd (10.HK) is 10.25%.

The Cost of Debt of Hang Lung Group Ltd (10.HK) is 5.00%.

	Range	Selected
Cost of equity	8.30% - 12.20%	10.25%
Tax rate	28.20% - 31.40%	29.80%
Cost of debt	4.00% - 6.00%	5.00%
WACC	4.2% - 6.1%	5.1%

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	0.91	1.19

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.30%	12.20%

Tax rate	28.20%	31.40%
Debt/Equity ratio	3.11	3.11
Cost of debt	4.00%	6.00%

After-tax WACC	4.2%	6.1%


Selected WACC	5.1%

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 (10.25%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.91) + 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.