000402.SZ
Financial Street Holdings Co Ltd
Price:  
3.06 
CNY
Volume:  
21,999,370.00
China | Real Estate Management & Development
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000402.SZ WACC - Weighted Average Cost of Capital

The WACC of Financial Street Holdings Co Ltd (000402.SZ) is 4.6%.

The Cost of Equity of Financial Street Holdings Co Ltd (000402.SZ) is 14.90%.
The Cost of Debt of Financial Street Holdings Co Ltd (000402.SZ) is 5.00%.

Range Selected
Cost of equity 11.30% - 18.50% 14.90%
Tax rate 28.10% - 37.70% 32.90%
Cost of debt 5.00% - 5.00% 5.00%
WACC 4.4% - 4.8% 4.6%
WACC

000402.SZ WACC calculation

Category Low High
Long-term bond rate 2.7% 3.2%
Equity market risk premium 6.1% 7.1%
Adjusted beta 1.41 2.09
Additional risk adjustments 0.0% 0.5%
Cost of equity 11.30% 18.50%
Tax rate 28.10% 37.70%
Debt/Equity ratio 8.29 8.29
Cost of debt 5.00% 5.00%
After-tax WACC 4.4% 4.8%
Selected WACC 4.6%

000402.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 000402.SZ:

cost_of_equity (14.90%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.41) + 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.