002087.SZ WACC - Weighted Average Cost of Capital

The WACC of Henan Xinye Textile Co Ltd (002087.SZ) is 6.1%.

The Cost of Equity of Henan Xinye Textile Co Ltd (002087.SZ) is 55.50%.

The Cost of Debt of Henan Xinye Textile Co Ltd (002087.SZ) is 5.00%.

	Range	Selected
Cost of equity	36.40% - 74.60%	55.50%
Tax rate	4.40% - 8.00%	6.20%
Cost of debt	5.00% - 5.00%	5.00%
WACC	5.7% - 6.6%	6.1%

WACC

002087.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	5.5	9.94

Additional risk adjustments	0.0%	0.5%
Cost of equity	36.40%	74.60%

Tax rate	4.40%	8.00%
Debt/Equity ratio	34.11	34.11
Cost of debt	5.00%	5.00%

After-tax WACC	5.7%	6.6%


Selected WACC	6.1%

002087.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 002087.SZ:

cost_of_equity (55.50%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (5.5) + 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.