2003.HK WACC - Weighted Average Cost of Capital

The WACC of VCREDIT Holdings Ltd (2003.HK) is 7.7%.

The Cost of Equity of VCREDIT Holdings Ltd (2003.HK) is 12.45%.

The Cost of Debt of VCREDIT Holdings Ltd (2003.HK) is 8.10%.

	Range	Selected
Cost of equity	7.50% - 17.40%	12.45%
Tax rate	22.90% - 23.60%	23.25%
Cost of debt	8.10% - 8.10%	8.10%
WACC	6.6% - 8.9%	7.7%

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	0.78	1.93

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.50%	17.40%

Tax rate	22.90%	23.60%
Debt/Equity ratio	3.19	3.19
Cost of debt	8.10%	8.10%

After-tax WACC	6.6%	8.9%


Selected WACC	7.7%

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 (12.45%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.78) + 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.