Valtech’s valuation team has recently completed an assessment of expected credit losses (ECL) for a Hong Kong-based media company. Our client’s primary source of revenue comes from advertising, which involves various counterparties across different sectors. We invested a significant amount of time in identifying suitable market benchmarks to determine loss rates for these counterparties. Given the diverse nature of these counterparties, including differences in industry, nature, and size, our team faced challenges in developing a systematic approach to derive objective results.

In addition to external data, it was essential for us to access our client’s internal data to determine credit losses. In this exercise, we thoroughly examined our client’s historical ECL records and integrated this information with observations based on external factors before arriving at our conclusions.