8540.HK WACC - Weighted Average Cost of Capital

The WACC of Victory Securities (Holdings) Company Ltd (8540.HK) is 6.4%.

The Cost of Equity of Victory Securities (Holdings) Company Ltd (8540.HK) is 6.00%.

The Cost of Debt of Victory Securities (Holdings) Company Ltd (8540.HK) is 9.35%.

	Range	Selected
Cost of equity	5.20% - 6.80%	6.00%
Tax rate	10.90% - 13.10%	12.00%
Cost of debt	4.10% - 14.60%	9.35%
WACC	4.9% - 8.0%	6.4%

WACC

8540.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.39	0.41

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.20%	6.80%

Tax rate	10.90%	13.10%
Debt/Equity ratio	0.26	0.26
Cost of debt	4.10%	14.60%

After-tax WACC	4.9%	8.0%


Selected WACC	6.4%

8540.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 8540.HK:

cost_of_equity (6.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.39) + 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.