000686.SZ WACC - Weighted Average Cost of Capital

The WACC of Northeast Securities Co Ltd (000686.SZ) is 7.3%.

The Cost of Equity of Northeast Securities Co Ltd (000686.SZ) is 14.40%.

The Cost of Debt of Northeast Securities Co Ltd (000686.SZ) is 5.00%.

	Range	Selected
Cost of equity	12.40% - 16.40%	14.40%
Tax rate	18.70% - 19.40%	19.05%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.7% - 7.9%	7.3%

WACC

000686.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.59	1.78

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.40%	16.40%

Tax rate	18.70%	19.40%
Debt/Equity ratio	2.21	2.21
Cost of debt	5.00%	5.00%

After-tax WACC	6.7%	7.9%


Selected WACC	7.3%

000686.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 000686.SZ:

cost_of_equity (14.40%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.59) + 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.