000032.SZ WACC - Weighted Average Cost of Capital

The WACC of Shenzhen Sed Industry Co Ltd (000032.SZ) is 8.4%.

The Cost of Equity of Shenzhen Sed Industry Co Ltd (000032.SZ) is 12.20%.

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

	Range	Selected
Cost of equity	10.60% - 13.80%	12.20%
Tax rate	32.00% - 34.40%	33.20%
Cost of debt	5.00% - 5.00%	5.00%
WACC	7.5% - 9.3%	8.4%

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	1.29	1.42

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.60%	13.80%

Tax rate	32.00%	34.40%
Debt/Equity ratio	0.74	0.74
Cost of debt	5.00%	5.00%

After-tax WACC	7.5%	9.3%


Selected WACC	8.4%

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 (12.20%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.29) + 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.