8217.HK WACC - Weighted Average Cost of Capital

The WACC of Luen Wong Group Holdings Ltd (8217.HK) is 5.8%.

The Cost of Equity of Luen Wong Group Holdings Ltd (8217.HK) is 6.15%.

The Cost of Debt of Luen Wong Group Holdings Ltd (8217.HK) is 4.25%.

	Range	Selected
Cost of equity	5.30% - 7.00%	6.15%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.1% - 6.6%	5.8%

WACC

8217.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.33	0.38

Additional risk adjustments	0.5%	1.0%
Cost of equity	5.30%	7.00%

Tax rate	22.10%	22.30%
Debt/Equity ratio	0.13	0.13
Cost of debt	4.00%	4.50%

After-tax WACC	5.1%	6.6%


Selected WACC	5.8%

8217.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 8217.HK:

cost_of_equity (6.15%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.33) + risk_adjustments (0.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.