000726.SZ WACC - Weighted Average Cost of Capital
The WACC of Lu Thai Textile Co Ltd (000726.SZ) is 8.0%.
| Range | Selected | |
| Cost of equity | 8.4% - 11.5% | 9.95% |
| Tax rate | 9.2% - 9.5% | 9.35% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.0% - 9.0% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.94 | 1.1 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.4% | 11.5% |
| Tax rate | 9.2% | 9.5% |
| Debt/Equity ratio | 0.55 | 0.55 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.0% | 9.0% |
| Selected WACC | 8.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 000726.SZ | Lu Thai Textile Co Ltd | 0.55 | 1 | 0.66 |
| 000936.SZ | Jiangsu Huaxicun Co Ltd | 0.17 | 1.67 | 1.44 |
| 002083.SZ | Sunvim Group Co Ltd | 0.51 | 1.07 | 0.73 |
| 002087.SZ | Henan Xinye Textile Co Ltd | 34.11 | 1.3 | 0.04 |
| 002293.SZ | Luolai Lifestyle Technology Co Ltd | 0.1 | 0.88 | 0.81 |
| 002394.SZ | Jiangsu Lianfa Textile Co Ltd | 0.42 | 1.34 | 0.97 |
| 002427.SZ | Zhejiang Unifull Industrial Fibre Co Ltd | 0.11 | 1.24 | 1.13 |
| 600070.SS | Zhejiang Furun Digital Technology Co Ltd | 0.49 | 0.23 | 0.16 |
| 600987.SS | Zhejiang Hangmin Co Ltd | 0.32 | 0.57 | 0.44 |
| 601339.SS | Bros Eastern Co Ltd | 0.53 | 0.76 | 0.51 |
| Low | High | |
| Unlevered beta | 0.6 | 0.76 |
| Relevered beta | 0.91 | 1.15 |
| Adjusted relevered beta | 0.94 | 1.1 |
000726.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 000726.SZ:
cost_of_equity (9.95%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.94) + 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.