000598.SZ WACC - Weighted Average Cost of Capital

The WACC of Chengdu Xingrong Environment Co Ltd (000598.SZ) is 6.7%.

The Cost of Equity of Chengdu Xingrong Environment Co Ltd (000598.SZ) is 8.80%.

The Cost of Debt of Chengdu Xingrong Environment Co Ltd (000598.SZ) is 5.00%.

	Range	Selected
Cost of equity	7.60% - 10.00%	8.80%
Tax rate	14.40% - 14.90%	14.65%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.1% - 7.3%	6.7%

WACC

000598.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.81	0.89

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.60%	10.00%

Tax rate	14.40%	14.90%
Debt/Equity ratio	0.86	0.86
Cost of debt	5.00%	5.00%

After-tax WACC	6.1%	7.3%


Selected WACC	6.7%

000598.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 000598.SZ:

cost_of_equity (8.80%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.81) + 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.