1125.HK WACC - Weighted Average Cost of Capital

The WACC of Lai Fung Holdings Ltd (1125.HK) is 11.0%.

The Cost of Equity of Lai Fung Holdings Ltd (1125.HK) is 9.75%.

The Cost of Debt of Lai Fung Holdings Ltd (1125.HK) is 14.25%.

	Range	Selected
Cost of equity	6.80% - 12.70%	9.75%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	5.60% - 22.90%	14.25%
WACC	4.5% - 17.6%	11.0%

WACC

1125.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.66	1.27

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.80%	12.70%

Tax rate	22.10%	22.30%
Debt/Equity ratio	27.57	27.57
Cost of debt	5.60%	22.90%

After-tax WACC	4.5%	17.6%


Selected WACC	11.0%

1125.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 1125.HK:

cost_of_equity (9.75%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.66) + 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.