1007.HK WACC - Weighted Average Cost of Capital

The WACC of Longhui International Holdings Ltd (1007.HK) is 7.2%.

The Cost of Equity of Longhui International Holdings Ltd (1007.HK) is 14.10%.

The Cost of Debt of Longhui International Holdings Ltd (1007.HK) is 5.50%.

	Range	Selected
Cost of equity	6.20% - 22.00%	14.10%
Tax rate	1.40% - 2.30%	1.85%
Cost of debt	4.00% - 7.00%	5.50%
WACC	4.4% - 10.0%	7.2%

WACC

1007.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.56	2.6

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.20%	22.00%

Tax rate	1.40%	2.30%
Debt/Equity ratio	3.78	3.78
Cost of debt	4.00%	7.00%

After-tax WACC	4.4%	10.0%


Selected WACC	7.2%

1007.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 1007.HK:

cost_of_equity (14.10%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * 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.