994.HK WACC - Weighted Average Cost of Capital

The WACC of CT Vision (International) Holdings Ltd (994.HK) is 8.1%.

The Cost of Equity of CT Vision (International) Holdings Ltd (994.HK) is 8.15%.

The Cost of Debt of CT Vision (International) Holdings Ltd (994.HK) is 6.80%.

	Range	Selected
Cost of equity	7.20% - 9.10%	8.15%
Tax rate	2.90% - 3.60%	3.25%
Cost of debt	6.60% - 7.00%	6.80%
WACC	7.1% - 9.0%	8.1%

WACC

994.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.72	0.75

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.20%	9.10%

Tax rate	2.90%	3.60%
Debt/Equity ratio	0.07	0.07
Cost of debt	6.60%	7.00%

After-tax WACC	7.1%	9.0%


Selected WACC	8.1%

994.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 994.HK:

cost_of_equity (8.15%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.72) + 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.