002105.SZ WACC - Weighted Average Cost of Capital

The WACC of HL Corp Shenzhen (002105.SZ) is 10.6%.

The Cost of Equity of HL Corp Shenzhen (002105.SZ) is 11.35%.

The Cost of Debt of HL Corp Shenzhen (002105.SZ) is 5.00%.

	Range	Selected
Cost of equity	9.90% - 12.80%	11.35%
Tax rate	12.90% - 16.10%	14.50%
Cost of debt	5.00% - 5.00%	5.00%
WACC	9.2% - 11.9%	10.6%

WACC

002105.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.17	1.29

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.90%	12.80%

Tax rate	12.90%	16.10%
Debt/Equity ratio	0.13	0.13
Cost of debt	5.00%	5.00%

After-tax WACC	9.2%	11.9%


Selected WACC	10.6%

002105.SZ'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 002105.SZ:

cost_of_equity (11.35%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.17) + 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.