188.HK WACC - Weighted Average Cost of Capital

The WACC of Sunwah Kingsway Capital Holdings Ltd (188.HK) is 6.1%.

The Cost of Equity of Sunwah Kingsway Capital Holdings Ltd (188.HK) is 6.25%.

The Cost of Debt of Sunwah Kingsway Capital Holdings Ltd (188.HK) is 5.95%.

	Range	Selected
Cost of equity	5.20% - 7.30%	6.25%
Tax rate	2.70% - 5.90%	4.30%
Cost of debt	4.90% - 7.00%	5.95%
WACC	5.1% - 7.1%	6.1%

WACC

188.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.4	0.49

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.20%	7.30%

Tax rate	2.70%	5.90%
Debt/Equity ratio	0.43	0.43
Cost of debt	4.90%	7.00%

After-tax WACC	5.1%	7.1%


Selected WACC	6.1%

188.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 188.HK:

cost_of_equity (6.25%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.4) + 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.