1212.HK WACC - Weighted Average Cost of Capital

The WACC of Lifestyle International Holdings Ltd (1212.HK) is 6.4%.

The Cost of Equity of Lifestyle International Holdings Ltd (1212.HK) is 9.70%.

The Cost of Debt of Lifestyle International Holdings Ltd (1212.HK) is 6.05%.

	Range	Selected
Cost of equity	6.50% - 12.90%	9.70%
Tax rate	14.50% - 18.20%	16.35%
Cost of debt	4.00% - 8.10%	6.05%
WACC	4.3% - 8.4%	6.4%

WACC

1212.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.61	1.3

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.50%	12.90%

Tax rate	14.50%	18.20%
Debt/Equity ratio	2.52	2.52
Cost of debt	4.00%	8.10%

After-tax WACC	4.3%	8.4%


Selected WACC	6.4%

1212.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 1212.HK:

cost_of_equity (9.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.61) + 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.