The WACC of Fang Holdings Ltd (SFUN) is 5.3%.
| Range | Selected | |
| Cost of equity | 59.80% - 80.40% | 70.10% |
| Tax rate | 24.20% - 33.60% | 28.90% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 4.9% - 5.6% | 5.3% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 13.35 | 14.55 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 59.80% | 80.40% |
| Tax rate | 24.20% | 33.60% |
| Debt/Equity ratio | 28.89 | 28.89 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 4.9% | 5.6% |
| Selected WACC | 5.3% | |
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 SFUN:
cost_of_equity (70.10%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (13.35) + 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.