2281.HK
Luzhou Xinglu Water Group Co Ltd
Price:  
0.77 
HKD
Volume:  
225,000.00
China | Water Utilities
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2281.HK WACC - Weighted Average Cost of Capital

The WACC of Luzhou Xinglu Water Group Co Ltd (2281.HK) is 6.6%.

The Cost of Equity of Luzhou Xinglu Water Group Co Ltd (2281.HK) is 14.50%.
The Cost of Debt of Luzhou Xinglu Water Group Co Ltd (2281.HK) is 5.00%.

Range Selected
Cost of equity 12.00% - 17.00% 14.50%
Tax rate 14.50% - 14.90% 14.70%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.0% - 7.2% 6.6%
WACC

2281.HK WACC calculation

Category Low High
Long-term bond rate 2.9% 3.4%
Equity market risk premium 6.0% 7.0%
Adjusted beta 1.53 1.88
Additional risk adjustments 0.0% 0.5%
Cost of equity 12.00% 17.00%
Tax rate 14.50% 14.90%
Debt/Equity ratio 3.35 3.35
Cost of debt 5.00% 5.00%
After-tax WACC 6.0% 7.2%
Selected WACC 6.6%

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 (14.50%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.53) + 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.