2003.HK WACC - Weighted Average Cost of Capital

The WACC of VCREDIT Holdings Ltd (2003.HK) is 7.3%.

The Cost of Equity of VCREDIT Holdings Ltd (2003.HK) is 10.10%.

The Cost of Debt of VCREDIT Holdings Ltd (2003.HK) is 8.30%.

	Range	Selected
Cost of equity	7.30% - 12.90%	10.10%
Tax rate	22.90% - 23.60%	23.25%
Cost of debt	8.10% - 8.50%	8.30%
WACC	6.5% - 8.0%	7.3%

WACC

2003.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.75	1.29

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.30%	12.90%

Tax rate	22.90%	23.60%
Debt/Equity ratio	3.08	3.08
Cost of debt	8.10%	8.50%

After-tax WACC	6.5%	8.0%


Selected WACC	7.3%

2003.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 2003.HK:

cost_of_equity (10.10%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.75) + 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.