000417.SZ WACC - Weighted Average Cost of Capital

The WACC of Hefei Department Store Group Co Ltd (000417.SZ) is 7.0%.

The Cost of Equity of Hefei Department Store Group Co Ltd (000417.SZ) is 8.90%.

The Cost of Debt of Hefei Department Store Group Co Ltd (000417.SZ) is 5.00%.

	Range	Selected
Cost of equity	7.70% - 10.10%	8.90%
Tax rate	32.70% - 33.50%	33.10%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.3% - 7.8%	7.0%

WACC

000417.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.82	0.89

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.70%	10.10%

Tax rate	32.70%	33.50%
Debt/Equity ratio	0.49	0.49
Cost of debt	5.00%	5.00%

After-tax WACC	6.3%	7.8%


Selected WACC	7.0%

000417.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 000417.SZ:

cost_of_equity (8.90%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.82) + 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.