The WACC of Shenzhen Cereals Holdings Co Ltd (000019.SZ) is 8.0%.
Range | Selected | |
Cost of equity | 7.7% - 9.9% | 8.8% |
Tax rate | 14.0% - 16.4% | 15.2% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.1% - 8.8% | 8.0% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.82 | 0.87 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.7% | 9.9% |
Tax rate | 14.0% | 16.4% |
Debt/Equity ratio | 0.23 | 0.23 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.1% | 8.8% |
Selected WACC | 8.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
000019.SZ | Shenzhen Cereals Holdings Co Ltd | 0.23 | 0.74 | 0.62 |
000505.SZ | Hainan Jingliang Holdings Co Ltd | 0.46 | 0.65 | 0.47 |
002567.SZ | Tangrenshen Group Co Ltd | 1.08 | 1.23 | 0.64 |
002582.SZ | Haoxiangni Health Food Co Ltd | 0.18 | 1.51 | 1.31 |
002840.SZ | Zhejiang Huatong Meat Products Co Ltd | 0.57 | 1.64 | 1.1 |
1068.HK | China Yurun Food Group Ltd | 1.58 | 1.42 | 0.61 |
1717.HK | Ausnutria Dairy Corp Ltd | 0.66 | 0.73 | 0.47 |
3999.HK | Dachan Food (Asia) Ltd | 1.06 | 0.11 | 0.06 |
600429.SS | Beijing Sanyuan Foods Co Ltd | 0.3 | 1.06 | 0.85 |
600873.SS | MeiHua Holdings Group Co Ltd | 0.17 | 0.84 | 0.74 |
Low | High | |
Unlevered beta | 0.61 | 0.68 |
Relevered beta | 0.73 | 0.81 |
Adjusted relevered beta | 0.82 | 0.87 |
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 000019.SZ:
cost_of_equity (8.80%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.82) + 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.