000032.SZ WACC - Weighted Average Cost of Capital

The WACC of Shenzhen Sed Industry Co Ltd (000032.SZ) is 8.6%.

The Cost of Equity of Shenzhen Sed Industry Co Ltd (000032.SZ) is 11.95%.

The Cost of Debt of Shenzhen Sed Industry Co Ltd (000032.SZ) is 5.00%.

	Range	Selected
Cost of equity	10.20% - 13.70%	11.95%
Tax rate	26.30% - 31.40%	28.85%
Cost of debt	5.00% - 5.00%	5.00%
WACC	7.6% - 9.7%	8.6%

WACC

000032.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.22	1.41

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.20%	13.70%

Tax rate	26.30%	31.40%
Debt/Equity ratio	0.65	0.65
Cost of debt	5.00%	5.00%

After-tax WACC	7.6%	9.7%


Selected WACC	8.6%

000032.SZ'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 000032.SZ:

cost_of_equity (11.95%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.22) + 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.