605.HK WACC - Weighted Average Cost of Capital
The WACC of China Financial Services Holdings Ltd (605.HK) is 5.7%.
| Range | Selected | |
| Cost of equity | 5.3% - 16.2% | 10.75% |
| Tax rate | 12.9% - 16.5% | 14.7% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 4.0% - 7.4% | 5.7% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.41 | 1.77 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.3% | 16.2% |
| Tax rate | 12.9% | 16.5% |
| Debt/Equity ratio | 2.46 | 2.46 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 4.0% | 7.4% |
| Selected WACC | 5.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 605.HK | China Financial Services Holdings Ltd | 2.46 | 19.54 | 6.33 |
| 1290.HK | China Huirong Financial Holdings Ltd | 1.8 | -0.1 | -0.04 |
| 1577.HK | Quanzhou Huixin Micro-credit Co Ltd | 0 | 0.85 | 0.84 |
| 1915.HK | Yangzhou Guangling District Taihe Rural Micro-finance Co Ltd | 0.01 | -0.32 | -0.32 |
| 2051.HK | 51 Credit Card Inc | 0.12 | 0.85 | 0.77 |
| 2388.T | Wedge Holdings Co Ltd | 0.11 | 0.83 | 0.76 |
| 3963.HK | China Rongzhong Financial Holdings Company Ltd | 0.04 | 0.68 | 0.66 |
| 600599.SS | Panda Financial Holding Corp Ltd | 0.06 | -0.26 | -0.25 |
| 6866.HK | Zuoli Kechuang Micro-finance Co Ltd | 1.62 | 0.23 | 0.09 |
| 8030.HK | Flying Financial Service Holdings Ltd | 0 | -0.23 | -0.23 |
| S11.BK | S 11 Group PCL | 1.39 | 1.83 | 0.84 |
| Low | High | |
| Unlevered beta | 0.09 | 0.76 |
| Relevered beta | 0.12 | 2.15 |
| Adjusted relevered beta | 0.41 | 1.77 |
605.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 605.HK:
cost_of_equity (10.75%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.41) + 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.