255.HK WACC - Weighted Average Cost of Capital

The WACC of Lung Kee Bermuda Holdings Ltd (255.HK) is 7.0%.

The Cost of Equity of Lung Kee Bermuda Holdings Ltd (255.HK) is 7.00%.

The Cost of Debt of Lung Kee Bermuda Holdings Ltd (255.HK) is 5.55%.

	Range	Selected
Cost of equity	6.10% - 7.90%	7.00%
Tax rate	28.70% - 30.30%	29.50%
Cost of debt	4.10% - 7.00%	5.55%
WACC	6.1% - 7.9%	7.0%

WACC

255.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.54	0.58

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.10%	7.90%

Tax rate	28.70%	30.30%
Debt/Equity ratio	0.01	0.01
Cost of debt	4.10%	7.00%

After-tax WACC	6.1%	7.9%


Selected WACC	7.0%

255.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 255.HK:

cost_of_equity (7.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.54) + 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.