1461.HK WACC - Weighted Average Cost of Capital

The WACC of Luzheng Futures Co Ltd (1461.HK) is 6.9%.

The Cost of Equity of Luzheng Futures Co Ltd (1461.HK) is 8.65%.

The Cost of Debt of Luzheng Futures Co Ltd (1461.HK) is 5.00%.

	Range	Selected
Cost of equity	7.50% - 9.80%	8.65%
Tax rate	26.40% - 32.60%	29.50%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.2% - 7.6%	6.9%

WACC

1461.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.78	0.85

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.50%	9.80%

Tax rate	26.40%	32.60%
Debt/Equity ratio	0.51	0.51
Cost of debt	5.00%	5.00%

After-tax WACC	6.2%	7.6%


Selected WACC	6.9%

1461.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 1461.HK:

cost_of_equity (8.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.78) + 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.