842.HK WACC - Weighted Average Cost of Capital

The WACC of Leoch International Technology Ltd (842.HK) is 7.5%.

The Cost of Equity of Leoch International Technology Ltd (842.HK) is 11.15%.

The Cost of Debt of Leoch International Technology Ltd (842.HK) is 5.75%.

	Range	Selected
Cost of equity	8.40% - 13.90%	11.15%
Tax rate	13.60% - 14.20%	13.90%
Cost of debt	4.60% - 6.90%	5.75%
WACC	5.8% - 9.2%	7.5%

WACC

842.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.92	1.44

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.40%	13.90%

Tax rate	13.60%	14.20%
Debt/Equity ratio	1.46	1.46
Cost of debt	4.60%	6.90%

After-tax WACC	5.8%	9.2%


Selected WACC	7.5%

842.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 842.HK:

cost_of_equity (11.15%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.92) + 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.