The WACC of Chengdu Hi-tech Development Co Ltd (000628.SZ) is 7.0%.
Range | Selected | |
Cost of equity | 6.3% - 9.3% | 7.8% |
Tax rate | 26.5% - 32.1% | 29.3% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.8% - 8.2% | 7.0% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.59 | 0.79 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.3% | 9.3% |
Tax rate | 26.5% | 32.1% |
Debt/Equity ratio | 0.22 | 0.22 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.8% | 8.2% |
Selected WACC | 7.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
000628.SZ | Chengdu Hi-tech Development Co Ltd | 0.22 | 1.45 | 1.24 |
000514.SZ | Chongqing yukaifa Co Ltd | 0.61 | 1.3 | 0.9 |
000609.SZ | Beijing Zodi Investment Co Ltd | 0.93 | 0.44 | 0.26 |
000667.SZ | Myhome Real Estate Development Group Co Ltd | 2.89 | 1.19 | 0.38 |
000797.SZ | China Wuyi Co Ltd | 2.31 | 1.28 | 0.47 |
000918.SZ | China Calxon Group Co Ltd | 7.39 | 1.54 | 0.24 |
59.HK | Skyfame Realty (Holdings) Ltd | 166.68 | 1.72 | 0.01 |
600162.SS | Shenzhen Heungkong Holding Co Ltd | 0.85 | 1.43 | 0.88 |
600638.SS | Shanghai New Huang Pu Industrial Group Co Ltd | 1.15 | 1.43 | 0.78 |
600683.SS | Metro Land Corporation Ltd | 14.43 | 1.16 | 0.1 |
Low | High | |
Unlevered beta | 0.33 | 0.59 |
Relevered beta | 0.39 | 0.69 |
Adjusted relevered beta | 0.59 | 0.79 |
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 000628.SZ:
cost_of_equity (7.80%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.59) + 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.