253.HK WACC - Weighted Average Cost of Capital

The WACC of Shun Ho Holdings Ltd (253.HK) is 7.9%.

The Cost of Equity of Shun Ho Holdings Ltd (253.HK) is 21.60%.

The Cost of Debt of Shun Ho Holdings Ltd (253.HK) is 6.05%.

	Range	Selected
Cost of equity	14.80% - 28.40%	21.60%
Tax rate	6.90% - 14.80%	10.85%
Cost of debt	4.00% - 8.10%	6.05%
WACC	5.5% - 10.3%	7.9%

WACC

253.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.99	3.52

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.80%	28.40%

Tax rate	6.90%	14.80%
Debt/Equity ratio	5.32	5.32
Cost of debt	4.00%	8.10%

After-tax WACC	5.5%	10.3%


Selected WACC	7.9%

253.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 253.HK:

cost_of_equity (21.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.99) + 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.