16.HK WACC - Weighted Average Cost of Capital
The WACC of Sun Hung Kai Properties Ltd (16.HK) is 5.7%.
| Range | Selected | |
| Cost of equity | 5.7% - 7.9% | 6.8% |
| Tax rate | 17.4% - 18.8% | 18.1% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 4.9% - 6.5% | 5.7% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.48 | 0.58 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.7% | 7.9% |
| Tax rate | 17.4% | 18.8% |
| Debt/Equity ratio | 0.48 | 0.48 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 4.9% | 6.5% |
| Selected WACC | 5.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 16.HK | Sun Hung Kai Properties Ltd | 0.48 | 0.63 | 0.45 |
| 127.HK | Chinese Estates Holdings Ltd | 1.15 | 0.59 | 0.3 |
| 17.HK | New World Development Co Ltd | 11.63 | 1.29 | 0.12 |
| 35.HK | Far East Consortium International Ltd | 13 | 0.48 | 0.04 |
| 4.HK | Wharf Holdings Ltd | 0.23 | 0.59 | 0.5 |
| 480.HK | HKR International Ltd | 8.96 | 0.56 | 0.07 |
| 488.HK | Lai Sun Development Co Ltd | 38.49 | 0.67 | 0.02 |
| 535.HK | Gemdale Properties and Investment Corporation Ltd | 2.5 | 1.32 | 0.43 |
| 604.HK | Shenzhen Investment Ltd | 8.53 | 1.43 | 0.18 |
| 683.HK | Kerry Properties Ltd | 1.99 | 0.65 | 0.25 |
| Low | High | |
| Unlevered beta | 0.16 | 0.27 |
| Relevered beta | 0.22 | 0.37 |
| Adjusted relevered beta | 0.48 | 0.58 |
16.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 16.HK:
cost_of_equity (6.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.48) + 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.