86.HK WACC - Weighted Average Cost of Capital

The WACC of Sun Hung Kai & Co Ltd (86.HK) is 5.9%.

The Cost of Equity of Sun Hung Kai & Co Ltd (86.HK) is 9.75%.

The Cost of Debt of Sun Hung Kai & Co Ltd (86.HK) is 5.50%.

	Range	Selected
Cost of equity	6.70% - 12.80%	9.75%
Tax rate	23.80% - 31.60%	27.70%
Cost of debt	5.00% - 6.00%	5.50%
WACC	4.8% - 7.0%	5.9%

WACC

86.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.64	1.28

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.70%	12.80%

Tax rate	23.80%	31.60%
Debt/Equity ratio	2	2
Cost of debt	5.00%	6.00%

After-tax WACC	4.8%	7.0%


Selected WACC	5.9%

86.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 86.HK:

cost_of_equity (9.75%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.64) + 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.