8616.HK WACC - Weighted Average Cost of Capital

The WACC of Sunray Engineering Group Ltd (8616.HK) is 5.8%.

The Cost of Equity of Sunray Engineering Group Ltd (8616.HK) is 6.65%.

The Cost of Debt of Sunray Engineering Group Ltd (8616.HK) is 6.55%.

	Range	Selected
Cost of equity	5.40% - 7.90%	6.65%
Tax rate	27.50% - 32.00%	29.75%
Cost of debt	6.10% - 7.00%	6.55%
WACC	5.0% - 6.6%	5.8%

WACC

8616.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.42	0.58

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.40%	7.90%

Tax rate	27.50%	32.00%
Debt/Equity ratio	0.73	0.73
Cost of debt	6.10%	7.00%

After-tax WACC	5.0%	6.6%


Selected WACC	5.8%

8616.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 8616.HK:

cost_of_equity (6.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.42) + 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.