The WACC of J.S. Corrugating Machinery Co Ltd (000821.SZ) is 8.8%.
Range | Selected | |
Cost of equity | 9.2% - 12.1% | 10.65% |
Tax rate | 8.2% - 10.9% | 9.55% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.8% - 9.8% | 8.8% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 1.06 | 1.18 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.2% | 12.1% |
Tax rate | 8.2% | 10.9% |
Debt/Equity ratio | 0.42 | 0.42 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.8% | 9.8% |
Selected WACC | 8.8% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
000821.SZ | J.S. Corrugating Machinery Co Ltd | 0.42 | 1.22 | 0.89 |
002046.SZ | Sinomach Precision Industry Co Ltd | 0.17 | 1.34 | 1.16 |
002255.SZ | Suzhou Hailu Heavy Industry Co Ltd | 0.04 | 1.01 | 0.98 |
002483.SZ | Jiangsu Rainbow Heavy Industries Co Ltd | 0.26 | 1.05 | 0.85 |
002520.SZ | ZheJiang RIFA Precision Machinery Co Ltd | 0.33 | 1.5 | 1.16 |
1651.HK | Precision Tsugami (China) Corporation Ltd | 0 | 0.57 | 0.57 |
2060.HK | Pujiang International Group Ltd | 15.63 | 0.21 | 0.01 |
300021.SZ | Dayu Water-saving Group Co Ltd | 0.72 | 1.16 | 0.7 |
300140.SZ | Cecep Environmental Protection Equipment Co Ltd | 0.61 | 1.92 | 1.23 |
603112.SS | Shanxi Huaxiang Group Co Ltd | 0.18 | 0.44 | 0.37 |
Low | High | |
Unlevered beta | 0.79 | 0.92 |
Relevered beta | 1.09 | 1.27 |
Adjusted relevered beta | 1.06 | 1.18 |
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 000821.SZ:
cost_of_equity (10.65%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.06) + 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.