000050.SZ WACC - Weighted Average Cost of Capital

The WACC of Tianma Microelectronics Co Ltd (000050.SZ) is 9.7%.

The Cost of Equity of Tianma Microelectronics Co Ltd (000050.SZ) is 20.35%.

The Cost of Debt of Tianma Microelectronics Co Ltd (000050.SZ) is 5.00%.

	Range	Selected
Cost of equity	18.30% - 22.40%	20.35%
Tax rate	25.10% - 42.00%	33.55%
Cost of debt	5.00% - 5.00%	5.00%
WACC	9.2% - 10.3%	9.7%

WACC

000050.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	2.54	2.63

Additional risk adjustments	0.0%	0.5%
Cost of equity	18.30%	22.40%

Tax rate	25.10%	42.00%
Debt/Equity ratio	1.65	1.65
Cost of debt	5.00%	5.00%

After-tax WACC	9.2%	10.3%


Selected WACC	9.7%

000050.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 000050.SZ:

cost_of_equity (20.35%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (2.54) + 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.