8078.HK WACC - Weighted Average Cost of Capital

The WACC of China Creative Digital Entertainment Ltd (8078.HK) is 5.9%.

The Cost of Equity of China Creative Digital Entertainment Ltd (8078.HK) is 13.45%.

The Cost of Debt of China Creative Digital Entertainment Ltd (8078.HK) is 5.85%.

	Range	Selected
Cost of equity	7.00% - 19.90%	13.45%
Tax rate	0.10% - 1.90%	1.00%
Cost of debt	4.70% - 7.00%	5.85%
WACC	4.8% - 7.0%	5.9%

WACC

8078.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.7	2.29

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.00%	19.90%

Tax rate	0.10%	1.90%
Debt/Equity ratio	105.33	105.33
Cost of debt	4.70%	7.00%

After-tax WACC	4.8%	7.0%


Selected WACC	5.9%

8078.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 8078.HK:

cost_of_equity (13.45%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.7) + 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.