851.HK WACC - Weighted Average Cost of Capital

The WACC of Sheng Yuan Holdings Ltd (851.HK) is 8.8%.

The Cost of Equity of Sheng Yuan Holdings Ltd (851.HK) is 9.00%.

The Cost of Debt of Sheng Yuan Holdings Ltd (851.HK) is 4.25%.

	Range	Selected
Cost of equity	7.30% - 10.70%	9.00%
Tax rate	14.50% - 32.30%	23.40%
Cost of debt	4.00% - 4.50%	4.25%
WACC	7.2% - 10.5%	8.8%

WACC

851.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.74	0.98

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.30%	10.70%

Tax rate	14.50%	32.30%
Debt/Equity ratio	0.03	0.03
Cost of debt	4.00%	4.50%

After-tax WACC	7.2%	10.5%


Selected WACC	8.8%

851.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 851.HK:

cost_of_equity (9.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.74) + 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.