1867.HK WACC - Weighted Average Cost of Capital

The WACC of LKS Holding Group Ltd (1867.HK) is 6.6%.

The Cost of Equity of LKS Holding Group Ltd (1867.HK) is 6.70%.

The Cost of Debt of LKS Holding Group Ltd (1867.HK) is 6.40%.

	Range	Selected
Cost of equity	5.60% - 7.80%	6.70%
Tax rate	13.30% - 30.30%	21.80%
Cost of debt	5.80% - 7.00%	6.40%
WACC	5.6% - 7.5%	6.6%

WACC

1867.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.46	0.56

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.60%	7.80%

Tax rate	13.30%	30.30%
Debt/Equity ratio	0.08	0.08
Cost of debt	5.80%	7.00%

After-tax WACC	5.6%	7.5%


Selected WACC	6.6%

1867.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 1867.HK:

cost_of_equity (6.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.46) + 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.