16.HK WACC - Weighted Average Cost of Capital

The WACC of Sun Hung Kai Properties Ltd (16.HK) is 5.7%.

The Cost of Equity of Sun Hung Kai Properties Ltd (16.HK) is 6.80%.

The Cost of Debt of Sun Hung Kai Properties Ltd (16.HK) is 4.25%.

	Range	Selected
Cost of equity	5.70% - 7.90%	6.80%
Tax rate	17.40% - 18.80%	18.10%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.9% - 6.5%	5.7%

WACC

16.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.48	0.58

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.70%	7.90%

Tax rate	17.40%	18.80%
Debt/Equity ratio	0.48	0.48
Cost of debt	4.00%	4.50%

After-tax WACC	4.9%	6.5%


Selected WACC	5.7%

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.