2281.HK WACC - Weighted Average Cost of Capital
The WACC of Luzhou Xinglu Water Group Co Ltd (2281.HK) is 6.5%.
| Range | Selected | |
| Cost of equity | 13.3% - 19.2% | 16.25% |
| Tax rate | 14.5% - 14.9% | 14.7% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.9% - 7.0% | 6.5% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.74 | 2.2 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 13.3% | 19.2% |
| Tax rate | 14.5% | 14.9% |
| Debt/Equity ratio | 4.4 | 4.4 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.9% | 7.0% |
| Selected WACC | 6.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 2281.HK | Luzhou Xinglu Water Group Co Ltd | 4.27 | 0.51 | 0.11 |
| 000605.SZ | Bohai Water Industry Co Ltd | 1.33 | 1.14 | 0.53 |
| 000692.SZ | Shenyang Huitian Thermal Power Co Ltd | 1.24 | 0.86 | 0.42 |
| 000711.SZ | Kingland Technology Co Ltd | 0.01 | 0.46 | 0.46 |
| 1853.HK | Jilin Province Chuncheng Heating Co Ltd | 0 | -0.17 | -0.17 |
| 3768.HK | Kunming Dianchi Water Treatment Co Ltd | 7.92 | 0.47 | 0.06 |
| 601199.SS | Jiangsu Jiangnan Water Co Ltd | 0.15 | 0.75 | 0.67 |
| 688466.SS | GreenTech Environmental Co Ltd | 0.26 | 1.11 | 0.91 |
| RANHILL.KL | Ranhill Utilities Bhd | 0.57 | 1.07 | 0.72 |
| WABAG.NS | Va Tech Wabag Ltd | 0.02 | 1.74 | 1.7 |
| Low | High | |
| Unlevered beta | 0.44 | 0.59 |
| Relevered beta | 2.1 | 2.79 |
| Adjusted relevered beta | 1.74 | 2.2 |
2281.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 2281.HK:
cost_of_equity (16.25%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.74) + 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.