1950.HK WACC - Weighted Average Cost of Capital

The WACC of Sunlight Technology Holdings Ltd (1950.HK) is 8.9%.

The Cost of Equity of Sunlight Technology Holdings Ltd (1950.HK) is 10.85%.

The Cost of Debt of Sunlight Technology Holdings Ltd (1950.HK) is 4.25%.

	Range	Selected
Cost of equity	9.00% - 12.70%	10.85%
Tax rate	24.30% - 32.80%	28.55%
Cost of debt	4.00% - 4.50%	4.25%
WACC	7.5% - 10.3%	8.9%

WACC

1950.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.03	1.27

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.00%	12.70%

Tax rate	24.30%	32.80%
Debt/Equity ratio	0.34	0.34
Cost of debt	4.00%	4.50%

After-tax WACC	7.5%	10.3%


Selected WACC	8.9%

1950.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 1950.HK:

cost_of_equity (10.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.03) + 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.