The WACC of Aoyuan Beauty Valley Technology Co Ltd (000615.SZ) is 6.5%.
Range | Selected | |
Cost of equity | 5.9% - 8.8% | 7.35% |
Tax rate | 4.3% - 9.1% | 6.7% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.5% - 7.4% | 6.5% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.53 | 0.71 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.9% | 8.8% |
Tax rate | 4.3% | 9.1% |
Debt/Equity ratio | 0.47 | 0.47 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.5% | 7.4% |
Selected WACC | 6.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
000615.SZ | Aoyuan Beauty Valley Technology Co Ltd | 0.47 | 0.36 | 0.25 |
000006.SZ | Shenzhen Zhenye Group Co Ltd | 0.73 | 1.12 | 0.66 |
000909.SZ | Soyea Technology Co Ltd | 0.36 | 0.92 | 0.68 |
002314.SZ | Shenzhen New Nanshan Holding Group Co Ltd | 4.23 | 1.41 | 0.28 |
2231.HK | JY Grandmark Holdings Ltd | 3.21 | 0.07 | 0.02 |
600077.SS | Sundy Land Investment Co Ltd | 19.94 | 1.54 | 0.08 |
600177.SS | Youngor Group Co Ltd | 0.62 | 0.9 | 0.57 |
600848.SS | Shanghai Lingang Holdings Co Ltd | 1.24 | 1.28 | 0.58 |
798.HK | China Electronics Optics Valley Union Holding Co Ltd | 4.88 | 0.76 | 0.13 |
9968.HK | Huijing Holdings Co Ltd | 85.92 | 1.56 | 0.02 |
Low | High | |
Unlevered beta | 0.2 | 0.39 |
Relevered beta | 0.3 | 0.57 |
Adjusted relevered beta | 0.53 | 0.71 |
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 000615.SZ:
cost_of_equity (7.35%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.53) + 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.