000608.SZ WACC - Weighted Average Cost of Capital

The WACC of Yang Guang Co Ltd (000608.SZ) is 8.3%.

The Cost of Equity of Yang Guang Co Ltd (000608.SZ) is 12.90%.

The Cost of Debt of Yang Guang Co Ltd (000608.SZ) is 5.00%.

	Range	Selected
Cost of equity	11.20% - 14.60%	12.90%
Tax rate	14.00% - 18.40%	16.20%
Cost of debt	5.00% - 5.00%	5.00%
WACC	7.6% - 9.1%	8.3%

WACC

000608.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.4	1.53

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.20%	14.60%

Tax rate	14.00%	18.40%
Debt/Equity ratio	1.11	1.11
Cost of debt	5.00%	5.00%

After-tax WACC	7.6%	9.1%


Selected WACC	8.3%

000608.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 000608.SZ:

cost_of_equity (12.90%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.4) + 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.