1918.HK WACC - Weighted Average Cost of Capital

The WACC of Sunac China Holdings Ltd (1918.HK) is 5.8%.

The Cost of Equity of Sunac China Holdings Ltd (1918.HK) is 25.60%.

The Cost of Debt of Sunac China Holdings Ltd (1918.HK) is 5.55%.

	Range	Selected
Cost of equity	22.30% - 28.90%	25.60%
Tax rate	9.60% - 20.30%	14.95%
Cost of debt	4.10% - 7.00%	5.55%
WACC	4.7% - 6.8%	5.8%

WACC

1918.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	3.25	3.59

Additional risk adjustments	0.0%	0.5%
Cost of equity	22.30%	28.90%

Tax rate	9.60%	20.30%
Debt/Equity ratio	17.76	17.76
Cost of debt	4.10%	7.00%

After-tax WACC	4.7%	6.8%


Selected WACC	5.8%

1918.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 1918.HK:

cost_of_equity (25.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (3.25) + 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.