1270.HK WACC - Weighted Average Cost of Capital

The WACC of Langham Hospitality Investments Ltd (1270.HK) is 8.8%.

The Cost of Equity of Langham Hospitality Investments Ltd (1270.HK) is 7.30%.

The Cost of Debt of Langham Hospitality Investments Ltd (1270.HK) is 9.30%.

	Range	Selected
Cost of equity	6.20% - 8.40%	7.30%
Tax rate	1.40% - 2.20%	1.80%
Cost of debt	4.00% - 14.60%	9.30%
WACC	4.4% - 13.1%	8.8%

WACC

1270.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.55	0.65

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.20%	8.40%

Tax rate	1.40%	2.20%
Debt/Equity ratio	3.85	3.85
Cost of debt	4.00%	14.60%

After-tax WACC	4.4%	13.1%


Selected WACC	8.8%

1270.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 1270.HK:

cost_of_equity (7.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.55) + 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.