FUTU
Futu Holdings Ltd
Price:  
101.93 
USD
Volume:  
3,659,173.00
Hong Kong | Capital Markets
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FUTU WACC - Weighted Average Cost of Capital

The WACC of Futu Holdings Ltd (FUTU) is 8.4%.

The Cost of Equity of Futu Holdings Ltd (FUTU) is 8.20%.
The Cost of Debt of Futu Holdings Ltd (FUTU) is 10.90%.

Range Selected
Cost of equity 7.00% - 9.40% 8.20%
Tax rate 12.10% - 13.30% 12.70%
Cost of debt 4.50% - 17.30% 10.90%
WACC 6.4% - 10.4% 8.4%
WACC

FUTU WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.67 0.81
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.00% 9.40%
Tax rate 12.10% 13.30%
Debt/Equity ratio 0.21 0.21
Cost of debt 4.50% 17.30%
After-tax WACC 6.4% 10.4%
Selected WACC 8.4%

FUTU'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 FUTU:

cost_of_equity (8.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.67) + 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.