The WACC of Shenzhen Kingkey Smart Agriculture Times Co Ltd (000048.SZ) is 9.3%.
Range | Selected | |
Cost of equity | 9.1% - 12.4% | 10.75% |
Tax rate | 23.2% - 27.0% | 25.1% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 8.0% - 10.6% | 9.3% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 1.05 | 1.22 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.1% | 12.4% |
Tax rate | 23.2% | 27.0% |
Debt/Equity ratio | 0.26 | 0.26 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 8.0% | 10.6% |
Selected WACC | 9.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
000048.SZ | Shenzhen Kingkey Smart Agriculture Times Co Ltd | 0.26 | 1.23 | 1.03 |
000893.SZ | Asia Potash International Investment Guangzhou Co Ltd | 0.08 | 1.51 | 1.43 |
002100.SZ | Tecon Biology Co Ltd | 0.8 | 1.12 | 0.71 |
002852.SZ | Daodaoquan Grain and Oil Co Ltd | 0.3 | 1.28 | 1.04 |
1117.HK | China Modern Dairy Holdings Ltd | 1.98 | 0.71 | 0.29 |
1432.HK | China Shengmu Organic Milk Ltd | 1.05 | 0.47 | 0.26 |
300175.SZ | Lontrue Co Ltd | 0.01 | 1.24 | 1.23 |
300189.SZ | Hainan Shennong Technology Co Ltd | 0.05 | 1.25 | 1.21 |
300505.SZ | Kunming Chuan Jin Nuo Chemical Co Ltd | 0.13 | 1.36 | 1.24 |
603363.SS | Fujian Aonong Biological Technology Group Incorporation Ltd | 0.41 | 0.6 | 0.46 |
Low | High | |
Unlevered beta | 0.9 | 1.11 |
Relevered beta | 1.07 | 1.33 |
Adjusted relevered beta | 1.05 | 1.22 |
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 000048.SZ:
cost_of_equity (10.75%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.05) + 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.