2012.HK WACC - Weighted Average Cost of Capital

The WACC of Sunshine Oilsands Ltd (2012.HK) is 4.5%.

The Cost of Equity of Sunshine Oilsands Ltd (2012.HK) is 8.60%.

The Cost of Debt of Sunshine Oilsands Ltd (2012.HK) is 4.30%.

	Range	Selected
Cost of equity	5.90% - 11.30%	8.60%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	4.00% - 4.60%	4.30%
WACC	3.7% - 5.3%	4.5%

WACC

2012.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.52	1.07

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.90%	11.30%

Tax rate	22.10%	22.30%
Debt/Equity ratio	3.55	3.55
Cost of debt	4.00%	4.60%

After-tax WACC	3.7%	5.3%


Selected WACC	4.5%

2012.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 2012.HK:

cost_of_equity (8.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.52) + 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.