2128.HK WACC - Weighted Average Cost of Capital

The WACC of China Lesso Group Holdings Ltd (2128.HK) is 8.0%.

The Cost of Equity of China Lesso Group Holdings Ltd (2128.HK) is 13.55%.

The Cost of Debt of China Lesso Group Holdings Ltd (2128.HK) is 5.10%.

	Range	Selected
Cost of equity	11.70% - 15.40%	13.55%
Tax rate	20.90% - 21.00%	20.95%
Cost of debt	4.20% - 6.00%	5.10%
WACC	6.8% - 9.2%	8.0%

WACC

2128.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.47	1.66

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.70%	15.40%

Tax rate	20.90%	21.00%
Debt/Equity ratio	1.37	1.37
Cost of debt	4.20%	6.00%

After-tax WACC	6.8%	9.2%


Selected WACC	8.0%

2128.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 2128.HK:

cost_of_equity (13.55%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.47) + 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.