8603.HK WACC - Weighted Average Cost of Capital

The WACC of Fameglow Holdings Ltd (8603.HK) is 6.1%.

The Cost of Equity of Fameglow Holdings Ltd (8603.HK) is 6.20%.

The Cost of Debt of Fameglow Holdings Ltd (8603.HK) is 4.55%.

	Range	Selected
Cost of equity	5.10% - 7.30%	6.20%
Tax rate	6.30% - 10.10%	8.20%
Cost of debt	4.00% - 5.10%	4.55%
WACC	5.0% - 7.2%	6.1%

WACC

8603.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.37	0.49

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.10%	7.30%

Tax rate	6.30%	10.10%
Debt/Equity ratio	0.04	0.04
Cost of debt	4.00%	5.10%

After-tax WACC	5.0%	7.2%


Selected WACC	6.1%

8603.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 8603.HK:

cost_of_equity (6.20%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.37) + 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.