2023.HK WACC - Weighted Average Cost of Capital

The WACC of China Ludao Technology Company Ltd (2023.HK) is 9.8%.

The Cost of Equity of China Ludao Technology Company Ltd (2023.HK) is 19.35%.

The Cost of Debt of China Ludao Technology Company Ltd (2023.HK) is 6.05%.

	Range	Selected
Cost of equity	14.70% - 24.00%	19.35%
Tax rate	11.60% - 12.40%	12.00%
Cost of debt	4.00% - 8.10%	6.05%
WACC	7.1% - 12.5%	9.8%

WACC

2023.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.97	2.88

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.70%	24.00%

Tax rate	11.60%	12.40%
Debt/Equity ratio	2.14	2.14
Cost of debt	4.00%	8.10%

After-tax WACC	7.1%	12.5%


Selected WACC	9.8%

2023.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 2023.HK:

cost_of_equity (19.35%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.97) + 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.