000501.SZ WACC - Weighted Average Cost of Capital

The WACC of Wuhan Department Store Group Co Ltd (000501.SZ) is 5.6%.

The Cost of Equity of Wuhan Department Store Group Co Ltd (000501.SZ) is 10.35%.

The Cost of Debt of Wuhan Department Store Group Co Ltd (000501.SZ) is 5.00%.

	Range	Selected
Cost of equity	7.60% - 13.10%	10.35%
Tax rate	33.90% - 36.60%	35.25%
Cost of debt	5.00% - 5.00%	5.00%
WACC	4.7% - 6.5%	5.6%

WACC

000501.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.8	1.32

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.60%	13.10%

Tax rate	33.90%	36.60%
Debt/Equity ratio	1.97	1.97
Cost of debt	5.00%	5.00%

After-tax WACC	4.7%	6.5%


Selected WACC	5.6%

000501.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 000501.SZ:

cost_of_equity (10.35%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.8) + 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.