8222.HK WACC - Weighted Average Cost of Capital

The WACC of E Lighting Group Holdings Ltd (8222.HK) is 7.5%.

The Cost of Equity of E Lighting Group Holdings Ltd (8222.HK) is 6.25%.

The Cost of Debt of E Lighting Group Holdings Ltd (8222.HK) is 10.10%.

	Range	Selected
Cost of equity	5.40% - 7.10%	6.25%
Tax rate	4.00% - 7.30%	5.65%
Cost of debt	5.60% - 14.60%	10.10%
WACC	5.4% - 9.6%	7.5%

WACC

8222.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.42	0.46

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.40%	7.10%

Tax rate	4.00%	7.30%
Debt/Equity ratio	0.63	0.63
Cost of debt	5.60%	14.60%

After-tax WACC	5.4%	9.6%


Selected WACC	7.5%

8222.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 8222.HK:

cost_of_equity (6.25%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.42) + 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.