242.HK WACC - Weighted Average Cost of Capital

The WACC of Shun Tak Holdings Ltd (242.HK) is 7.8%.

The Cost of Equity of Shun Tak Holdings Ltd (242.HK) is 11.80%.

The Cost of Debt of Shun Tak Holdings Ltd (242.HK) is 9.30%.

	Range	Selected
Cost of equity	9.00% - 14.60%	11.80%
Tax rate	16.40% - 22.40%	19.40%
Cost of debt	4.00% - 14.60%	9.30%
WACC	3.9% - 11.7%	7.8%

WACC

242.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	1.53

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.00%	14.60%

Tax rate	16.40%	22.40%
Debt/Equity ratio	9.36	9.36
Cost of debt	4.00%	14.60%

After-tax WACC	3.9%	11.7%


Selected WACC	7.8%

242.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 242.HK:

cost_of_equity (11.80%) = 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.