2186.HK WACC - Weighted Average Cost of Capital

The WACC of Luye Pharma Group Ltd (2186.HK) is 8.4%.

The Cost of Equity of Luye Pharma Group Ltd (2186.HK) is 14.65%.

The Cost of Debt of Luye Pharma Group Ltd (2186.HK) is 5.25%.

	Range	Selected
Cost of equity	11.80% - 17.50%	14.65%
Tax rate	23.10% - 24.00%	23.55%
Cost of debt	4.00% - 6.50%	5.25%
WACC	6.7% - 10.1%	8.4%

WACC

2186.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.49	1.95

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.80%	17.50%

Tax rate	23.10%	24.00%
Debt/Equity ratio	1.41	1.41
Cost of debt	4.00%	6.50%

After-tax WACC	6.7%	10.1%


Selected WACC	8.4%

2186.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 2186.HK:

cost_of_equity (14.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.49) + 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.