The WACC of Zotye Automobile Co Ltd (000980.SZ) is 8.3%.
Range | Selected | |
Cost of equity | 7.1% - 10.7% | 8.9% |
Tax rate | 1.0% - 1.4% | 1.2% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.7% - 9.8% | 8.3% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.72 | 0.99 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.1% | 10.7% |
Tax rate | 1.0% | 1.4% |
Debt/Equity ratio | 0.2 | 0.2 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.7% | 9.8% |
Selected WACC | 8.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
000980.SZ | Zotye Automobile Co Ltd | 0.2 | 2.09 | 1.75 |
000572.SZ | Haima Automobile Co.,Ltd | 0.23 | 1.25 | 1.01 |
1122.HK | Qingling Motors Co Ltd | 0.01 | 0.72 | 0.71 |
200054.SZ | Chongqing Jianshe Vehicle System Co Ltd | 3.94 | 1.02 | 0.21 |
300825.SZ | IAT Automobile Technology Co Ltd | 0.12 | 1.52 | 1.36 |
489.HK | Dongfeng Motor Group Co Ltd | 3.76 | 1.08 | 0.23 |
600104.SS | SAIC Motor Corp Ltd | 1.52 | 0.73 | 0.29 |
600303.SS | Liaoning SG Automotive Group Co Ltd | 0.33 | 0.82 | 0.62 |
600609.SS | Shenyang Jinbei Automotive Co Ltd | 0.03 | 1.65 | 1.61 |
SVAV.ME | Sollers PAO | 0.5 | -0.32 | -0.21 |
Low | High | |
Unlevered beta | 0.49 | 0.83 |
Relevered beta | 0.58 | 0.99 |
Adjusted relevered beta | 0.72 | 0.99 |
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 000980.SZ:
cost_of_equity (8.90%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.72) + 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.