303.HK WACC - Weighted Average Cost of Capital

The WACC of Vtech Holdings Ltd (303.HK) is 9.0%.

The Cost of Equity of Vtech Holdings Ltd (303.HK) is 9.45%.

The Cost of Debt of Vtech Holdings Ltd (303.HK) is 4.45%.

	Range	Selected
Cost of equity	6.90% - 12.00%	9.45%
Tax rate	11.40% - 12.00%	11.70%
Cost of debt	4.00% - 4.90%	4.45%
WACC	6.7% - 11.4%	9.0%

WACC

303.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.68	1.16

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	12.00%

Tax rate	11.40%	12.00%
Debt/Equity ratio	0.08	0.08
Cost of debt	4.00%	4.90%

After-tax WACC	6.7%	11.4%


Selected WACC	9.0%

303.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 303.HK:

cost_of_equity (9.45%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.68) + 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.