311.HK WACC - Weighted Average Cost of Capital

The WACC of Luen Thai Holdings Ltd (311.HK) is 5.6%.

The Cost of Equity of Luen Thai Holdings Ltd (311.HK) is 6.35%.

The Cost of Debt of Luen Thai Holdings Ltd (311.HK) is 6.30%.

	Range	Selected
Cost of equity	4.90% - 7.80%	6.35%
Tax rate	9.50% - 16.40%	12.95%
Cost of debt	5.60% - 7.00%	6.30%
WACC	5.0% - 6.1%	5.6%

WACC

311.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.34	0.57

Additional risk adjustments	0.0%	0.5%
Cost of equity	4.90%	7.80%

Tax rate	9.50%	16.40%
Debt/Equity ratio	8.13	8.13
Cost of debt	5.60%	7.00%

After-tax WACC	5.0%	6.1%


Selected WACC	5.6%

311.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 311.HK:

cost_of_equity (6.35%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.34) + 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.