703.HK WACC - Weighted Average Cost of Capital

The WACC of Future Bright Holdings Ltd (703.HK) is 7.9%.

The Cost of Equity of Future Bright Holdings Ltd (703.HK) is 11.80%.

The Cost of Debt of Future Bright Holdings Ltd (703.HK) is 7.70%.

	Range	Selected
Cost of equity	8.60% - 15.00%	11.80%
Tax rate	9.00% - 12.10%	10.55%
Cost of debt	4.00% - 11.40%	7.70%
WACC	4.8% - 11.1%	7.9%

WACC

703.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.96	1.59

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.60%	15.00%

Tax rate	9.00%	12.10%
Debt/Equity ratio	3.44	3.44
Cost of debt	4.00%	11.40%

After-tax WACC	4.8%	11.1%


Selected WACC	7.9%

703.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 703.HK:

cost_of_equity (11.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.96) + 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.