411.HK WACC - Weighted Average Cost of Capital

The WACC of Lam Soon Hong Kong Ltd (411.HK) is 7.2%.

The Cost of Equity of Lam Soon Hong Kong Ltd (411.HK) is 7.20%.

The Cost of Debt of Lam Soon Hong Kong Ltd (411.HK) is 4.85%.

	Range	Selected
Cost of equity	5.50% - 8.90%	7.20%
Tax rate	12.90% - 16.20%	14.55%
Cost of debt	4.00% - 5.70%	4.85%
WACC	5.5% - 8.9%	7.2%

WACC

411.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.45	0.72

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.50%	8.90%

Tax rate	12.90%	16.20%
Debt/Equity ratio	0	0
Cost of debt	4.00%	5.70%

After-tax WACC	5.5%	8.9%


Selected WACC	7.2%

411.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 411.HK:

cost_of_equity (7.20%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.45) + 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.