002050.SZ WACC - Weighted Average Cost of Capital

The WACC of Zhejiang Sanhua Intelligent Controls Co Ltd (002050.SZ) is 10.4%.

The Cost of Equity of Zhejiang Sanhua Intelligent Controls Co Ltd (002050.SZ) is 10.70%.

The Cost of Debt of Zhejiang Sanhua Intelligent Controls Co Ltd (002050.SZ) is 5.00%.

	Range	Selected
Cost of equity	9.30% - 12.10%	10.70%
Tax rate	14.20% - 15.00%	14.60%
Cost of debt	5.00% - 5.00%	5.00%
WACC	9.1% - 11.8%	10.4%

WACC

002050.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.07	1.19

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.30%	12.10%

Tax rate	14.20%	15.00%
Debt/Equity ratio	0.04	0.04
Cost of debt	5.00%	5.00%

After-tax WACC	9.1%	11.8%


Selected WACC	10.4%

002050.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 002050.SZ:

cost_of_equity (10.70%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.07) + 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.