1771.HK WACC - Weighted Average Cost of Capital

The WACC of Sunfonda Group Holdings Ltd (1771.HK) is 4.6%.

The Cost of Equity of Sunfonda Group Holdings Ltd (1771.HK) is 11.35%.

The Cost of Debt of Sunfonda Group Holdings Ltd (1771.HK) is 5.75%.

	Range	Selected
Cost of equity	7.30% - 15.40%	11.35%
Tax rate	27.60% - 30.90%	29.25%
Cost of debt	4.50% - 7.00%	5.75%
WACC	3.6% - 5.7%	4.6%

WACC

1771.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.74	1.65

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.30%	15.40%

Tax rate	27.60%	30.90%
Debt/Equity ratio	11.55	11.55
Cost of debt	4.50%	7.00%

After-tax WACC	3.6%	5.7%


Selected WACC	4.6%

1771.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 1771.HK:

cost_of_equity (11.35%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.74) + 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.