1778.HK WACC - Weighted Average Cost of Capital

The WACC of Colour Life Services Group Co Ltd (1778.HK) is 13.3%.

The Cost of Equity of Colour Life Services Group Co Ltd (1778.HK) is 11.20%.

The Cost of Debt of Colour Life Services Group Co Ltd (1778.HK) is 51.20%.

	Range	Selected
Cost of equity	9.90% - 12.50%	11.20%
Tax rate	33.50% - 38.50%	36.00%
Cost of debt	51.20% - 51.20%	51.20%
WACC	12.3% - 14.3%	13.3%

WACC

1778.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.18	1.23

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.90%	12.50%

Tax rate	33.50%	38.50%
Debt/Equity ratio	0.11	0.11
Cost of debt	51.20%	51.20%

After-tax WACC	12.3%	14.3%


Selected WACC	13.3%

1778.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 1778.HK:

cost_of_equity (11.20%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.18) + 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.