GURUFOCUS.COM » STOCK LIST » Healthcare » Drug Manufacturers » Luye Pharma Group Ltd (HKSE:02186) » Definitions » WACC %

Luye Pharma Group (HKSE:02186) WACC % :9.11% (As of Dec. 14, 2024)


View and export this data going back to 2014. Start your Free Trial

What is Luye Pharma Group WACC %?

As of today (2024-12-14), Luye Pharma Group's weighted average cost of capital is 9.11%%. Luye Pharma Group's ROIC % is 5.55% (calculated using TTM income statement data). Luye Pharma Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.

For a comprehensive WACC calculation, please access the WACC Calculator.


Luye Pharma Group WACC % Historical Data

The historical data trend for Luye Pharma Group's WACC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Luye Pharma Group WACC % Chart

Luye Pharma Group Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
WACC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 6.19 4.76 5.64 8.82 10.00

Luye Pharma Group Semi-Annual Data
Dec14 Jun15 Dec15 Jun16 Dec16 Jun17 Dec17 Jun18 Dec18 Jun19 Dec19 Jun20 Dec20 Jun21 Dec21 Jun22 Dec22 Jun23 Dec23 Jun24
WACC % Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6.27 8.82 8.58 10.00 9.55

Competitive Comparison of Luye Pharma Group's WACC %

For the Drug Manufacturers - Specialty & Generic subindustry, Luye Pharma Group's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Luye Pharma Group's WACC % Distribution in the Drug Manufacturers Industry

For the Drug Manufacturers industry and Healthcare sector, Luye Pharma Group's WACC % distribution charts can be found below:

* The bar in red indicates where Luye Pharma Group's WACC % falls into.



Luye Pharma Group WACC % Calculation

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

WACC=E/(E + D)*Cost of Equity+D/(E + D)*Cost of Debt*(1 - Tax Rate)

1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, Luye Pharma Group's market capitalization (E) is HK$8877.543 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest one-year semi-annual average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Jun. 2024, Luye Pharma Group's latest one-year semi-annual average Book Value of Debt (D) is HK$10061.0567 Mil.
a) weight of equity = E / (E + D) = 8877.543 / (8877.543 + 10061.0567) = 0.4688
b) weight of debt = D / (E + D) = 10061.0567 / (8877.543 + 10061.0567) = 0.5312

2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 4.395%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. Luye Pharma Group's beta is 1.41.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 4.395% + 1.41 * 6% = 12.855%

3. Cost of Debt:
GuruFocus uses latest TTM Interest Expense divided by the latest one-year semi-annual average debt to get the simplified cost of debt.
As of Jun. 2024, Luye Pharma Group's interest expense (positive number) was HK$702.288 Mil. Its total Book Value of Debt (D) is HK$10061.0567 Mil.
Cost of Debt = 702.288 / 10061.0567 = 6.9803%.

4. Multiply by one minus TTM Tax Rate:
GuruFocus uses the most recent TTM Tax Expense divided by the most recent TTM Pre-Tax Income to calculate the tax rate. The calculated TTM tax rate is limited to between 0% and 100%. If the calculated tax rate is higher than 100%, it is set to 100%. If the calculated tax rate is less than 0%, it is set to 0%.
The latest calculated TTM Tax Rate = 183.472 / 1085.835 = 16.9%.

Luye Pharma Group's Weighted Average Cost Of Capital (WACC) for Today is calculated as:

WACC=E / (E + D)*Cost of Equity+D / (E + D)*Cost of Debt*(1 - Tax Rate)
=0.4688*12.855%+0.5312*6.9803%*(1 - 16.9%)
=9.11%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Luye Pharma Group  (HKSE:02186) WACC % Explanation

Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Luye Pharma Group's weighted average cost of capital is 9.11%%. Luye Pharma Group's ROIC % is 5.55% (calculated using TTM income statement data). Luye Pharma Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest one-year semi-annual average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.
For companies that report quarterly, GuruFocus combines all of the most recent year's quarterly debt data from the beginning of the year to the year-end and calculates the average.
For companies that report semi-annually, GuruFocus combines all of the most recent year's semi-annual debt data from the start of the year to the year-end and calculates the average.
For companies that report annually, GuruFocus combines the beginning and ending annual debt data from the most recent year and then calculates the average.

2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.

3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.

4. GuruFocus uses the latest TTM Interest Expense divided by the latest one-year semi-annual average debt to get the simplified cost of debt.


Related Terms

Luye Pharma Group Business Description

Traded in Other Exchanges
Address
Hongqiao Road 1438, 22/F, Gubei International Fortune Center II, Changning District, Shanghai, CHN, 264003
Luye Pharma Group Ltd is a China-based drug manufacturer that focuses on development, production, marketing and sale of pharmaceutical products. The company develops drugs related to diagnosing and treating cancer, the cardiovascular system, the alimentary tract, and the central nervous system. The company's highest revenue share comes from oncology drugs, followed by central nervous system drugs. The company develops drugs for world-wide use in Asia, Europe, and the United States. The Group organizes its business segments by type of products. Oncology drugs, Cardiovascular system drugs, Alimentary tract and metabolism drugs and Central nervous system drugs. It derives maximum revenue from the sale of Oncology drugs.
Executives
Ubs Group Ag 2201 Interest of corporation controlled by you
Liu Dianbo 2301 Trustee
Luye Life Sciences Group Ltd 2201 Interest of corporation controlled by you
Luye Pharma Holdings Ltd. 2201 Interest of corporation controlled by you
Nelumbo Investments Limited 2201 Interest of corporation controlled by you
Shorea Lbg 2201 Interest of corporation controlled by you
Luye Pharmaceutical Investment Co., Ltd. 2101 Beneficial owner
Ginkgo (ptc) Limited 2301 Trustee
Luye Pharmaceutical International Co., Ltd. 2201 Interest of corporation controlled by you
Yi Fang Da Ji Jin Guan Li You Xian Gong Si 2102 Investment manager
Hillhouse Nev Holdings Limited 2101 Beneficial owner
Hillhouse Investment Management, Ltd. 2102 Investment manager
Hillhouse Fund V, L.p. 2201 Interest of corporation controlled by you
Xin Ye Sheng Wu Yi Yao Kong Gu You Xian Gong Si
Yang Yu Fen

Luye Pharma Group Headlines

No Headlines