194.HK WACC - Weighted Average Cost of Capital

The WACC of Liu Chong Hing Investment Ltd (194.HK) is 8.6%.

The Cost of Equity of Liu Chong Hing Investment Ltd (194.HK) is 8.80%.

The Cost of Debt of Liu Chong Hing Investment Ltd (194.HK) is 12.25%.

	Range	Selected
Cost of equity	6.00% - 11.60%	8.80%
Tax rate	19.00% - 32.60%	25.80%
Cost of debt	4.60% - 19.90%	12.25%
WACC	4.4% - 12.8%	8.6%

WACC

194.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.53	1.11

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.00%	11.60%

Tax rate	19.00%	32.60%
Debt/Equity ratio	2.14	2.14
Cost of debt	4.60%	19.90%

After-tax WACC	4.4%	12.8%


Selected WACC	8.6%

194.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 194.HK:

cost_of_equity (8.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.53) + 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.