265.HK WACC - Weighted Average Cost of Capital

The WACC of Orient Victory Travel Group Company Ltd (265.HK) is 18.9%.

The Cost of Equity of Orient Victory Travel Group Company Ltd (265.HK) is 7.70%.

The Cost of Debt of Orient Victory Travel Group Company Ltd (265.HK) is 76.35%.

	Range	Selected
Cost of equity	6.30% - 9.10%	7.70%
Tax rate	8.50% - 10.60%	9.55%
Cost of debt	8.10% - 144.60%	76.35%
WACC	6.5% - 31.4%	18.9%

WACC

265.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.58	0.75

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.30%	9.10%

Tax rate	8.50%	10.60%
Debt/Equity ratio	0.23	0.23
Cost of debt	8.10%	144.60%

After-tax WACC	6.5%	31.4%


Selected WACC	18.9%

265.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 265.HK:

cost_of_equity (7.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.58) + 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.