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 15.65%.

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

	Range	Selected
Cost of equity	11.90% - 19.40%	15.65%
Tax rate	28.10% - 37.70%	32.90%
Cost of debt	5.00% - 5.00%	5.00%
WACC	4.4% - 4.7%	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	1.51	2.21

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.90%	19.40%

Tax rate	28.10%	37.70%
Debt/Equity ratio	9.25	9.25
Cost of debt	5.00%	5.00%

After-tax WACC	4.4%	4.7%


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 (15.65%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.51) + 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.