7.HK WACC - Weighted Average Cost of Capital

The WACC of Hong Kong Finance Investment Holding Group Ltd (7.HK) is 7.4%.

The Cost of Equity of Hong Kong Finance Investment Holding Group Ltd (7.HK) is 16.80%.

The Cost of Debt of Hong Kong Finance Investment Holding Group Ltd (7.HK) is 6.80%.

	Range	Selected
Cost of equity	12.70% - 20.90%	16.80%
Tax rate	17.20% - 23.00%	20.10%
Cost of debt	6.60% - 7.00%	6.80%
WACC	6.8% - 8.1%	7.4%

WACC

7.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.64	2.44

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.70%	20.90%

Tax rate	17.20%	23.00%
Debt/Equity ratio	4.7	4.7
Cost of debt	6.60%	7.00%

After-tax WACC	6.8%	8.1%


Selected WACC	7.4%

7.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 7.HK:

cost_of_equity (16.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.64) + 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.