000988.SZ WACC - Weighted Average Cost of Capital
The WACC of Huagong Tech Co Ltd (000988.SZ) is 11.5%.
| Range | Selected | |
| Cost of equity | 10.7% - 14.1% | 12.4% |
| Tax rate | 9.5% - 10.5% | 10% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 10.0% - 13.0% | 11.5% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.32 | 1.47 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.7% | 14.1% |
| Tax rate | 9.5% | 10.5% |
| Debt/Equity ratio | 0.13 | 0.13 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 10.0% | 13.0% |
| Selected WACC | 11.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 000988.SZ | Huagong Tech Co Ltd | 0.13 | 1.3 | 1.16 |
| 002960.SZ | Jade Bird Fire Co Ltd | 0.1 | 1.66 | 1.52 |
| 300232.SZ | Unilumin Group Co Ltd | 0.36 | 1.49 | 1.12 |
| 300296.SZ | Leyard Optoelectronic Co Ltd | 0.11 | 1.69 | 1.53 |
| 300567.SZ | Wuhan Jingce Electronic Group Co Ltd | 0.23 | 1.71 | 1.42 |
| 300747.SZ | Wuhan Raycus Fiber Laser Technologies Co Ltd | 0.09 | 1.63 | 1.52 |
| 603025.SS | Beijing Dahao Technology Corp Ltd | 0.08 | 1.17 | 1.1 |
| 688001.SS | Suzhou HYC Technology Co Ltd | 0.1 | 1.81 | 1.66 |
| 688007.SS | Appotronics Corp Ltd | 0.13 | 1.69 | 1.51 |
| 688188.SS | Shanghai Friendess Electronic Technology Corp Ltd | 0 | 0.93 | 0.93 |
| Low | High | |
| Unlevered beta | 1.32 | 1.51 |
| Relevered beta | 1.48 | 1.7 |
| Adjusted relevered beta | 1.32 | 1.47 |
000988.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 000988.SZ:
cost_of_equity (12.40%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.32) + 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.