992.HK WACC - Weighted Average Cost of Capital

The WACC of Lenovo Group Ltd (992.HK) is 9.6%.

The Cost of Equity of Lenovo Group Ltd (992.HK) is 10.75%.

The Cost of Debt of Lenovo Group Ltd (992.HK) is 8.45%.

	Range	Selected
Cost of equity	8.70% - 12.80%	10.75%
Tax rate	20.50% - 21.80%	21.15%
Cost of debt	4.00% - 12.90%	8.45%
WACC	7.1% - 12.0%	9.6%

WACC

992.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.97	1.28

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.70%	12.80%

Tax rate	20.50%	21.80%
Debt/Equity ratio	0.39	0.39
Cost of debt	4.00%	12.90%

After-tax WACC	7.1%	12.0%


Selected WACC	9.6%

992.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 992.HK:

cost_of_equity (10.75%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.97) + 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.