1281.HK WACC - Weighted Average Cost of Capital

The WACC of Longitech Smart Energy Holding Ltd (1281.HK) is 7.7%.

The Cost of Equity of Longitech Smart Energy Holding Ltd (1281.HK) is 10.15%.

The Cost of Debt of Longitech Smart Energy Holding Ltd (1281.HK) is 5.70%.

	Range	Selected
Cost of equity	7.70% - 12.60%	10.15%
Tax rate	8.30% - 13.50%	10.90%
Cost of debt	4.90% - 6.50%	5.70%
WACC	6.2% - 9.2%	7.7%

WACC

1281.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.82	1.25

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.70%	12.60%

Tax rate	8.30%	13.50%
Debt/Equity ratio	0.93	0.93
Cost of debt	4.90%	6.50%

After-tax WACC	6.2%	9.2%


Selected WACC	7.7%

1281.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 1281.HK:

cost_of_equity (10.15%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.82) + 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.