000875.SZ WACC - Weighted Average Cost of Capital

The WACC of Jilin Electric Power Co Ltd (000875.SZ) is 6.8%.

The Cost of Equity of Jilin Electric Power Co Ltd (000875.SZ) is 13.90%.

The Cost of Debt of Jilin Electric Power Co Ltd (000875.SZ) is 5.00%.

	Range	Selected
Cost of equity	11.80% - 16.00%	13.90%
Tax rate	17.90% - 18.30%	18.10%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.2% - 7.4%	6.8%

WACC

000875.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.48	1.73

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.80%	16.00%

Tax rate	17.90%	18.30%
Debt/Equity ratio	2.61	2.61
Cost of debt	5.00%	5.00%

After-tax WACC	6.2%	7.4%


Selected WACC	6.8%

000875.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 000875.SZ:

cost_of_equity (13.90%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.48) + 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.