The WACC of Chengdu Xingrong Environment Co Ltd (000598.SZ) is 6.6%.
Range | Selected | |
Cost of equity | 7.3% - 9.8% | 8.55% |
Tax rate | 14.4% - 14.9% | 14.65% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.0% - 7.3% | 6.6% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.76 | 0.86 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.3% | 9.8% |
Tax rate | 14.4% | 14.9% |
Debt/Equity ratio | 0.81 | 0.81 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.0% | 7.3% |
Selected WACC | 6.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
000598.SZ | Chengdu Xingrong Environment Co Ltd | 0.81 | 0.72 | 0.42 |
000685.SZ | Zhongshan Public Utilities Group Co Ltd | 0.68 | 1.05 | 0.66 |
000711.SZ | Kingland Technology Co Ltd | 0.01 | 0.48 | 0.48 |
600167.SS | Luenmei Quantum Co Ltd | 0.22 | 0.63 | 0.53 |
600168.SS | Wuhan Sanzhen Industry Holding Co Ltd | 4.21 | 1.17 | 0.25 |
600323.SS | Grandblue Environment Co Ltd | 0.89 | 0.51 | 0.29 |
600461.SS | Jiangxi Hongcheng Environment Co Ltd | 0.7 | 0.74 | 0.47 |
601158.SS | Chongqing Water Group Co Ltd | 0.46 | 0.74 | 0.53 |
601368.SS | Guangxi Nanning Waterworks Co Ltd | 3.46 | 0.79 | 0.2 |
6136.HK | Kangda International Environmental Company Ltd | 13 | 0.39 | 0.03 |
Low | High | |
Unlevered beta | 0.37 | 0.47 |
Relevered beta | 0.64 | 0.79 |
Adjusted relevered beta | 0.76 | 0.86 |
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 000598.SZ:
cost_of_equity (8.55%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.76) + 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.