002129.SZ WACC - Weighted Average Cost of Capital

The WACC of Tianjin Zhonghuan Semiconductor Ltd (002129.SZ) is 7.9%.

The Cost of Equity of Tianjin Zhonghuan Semiconductor Ltd (002129.SZ) is 13.30%.

The Cost of Debt of Tianjin Zhonghuan Semiconductor Ltd (002129.SZ) is 5.00%.

	Range	Selected
Cost of equity	11.50% - 15.10%	13.30%
Tax rate	8.80% - 11.90%	10.35%
Cost of debt	5.00% - 5.00%	5.00%
WACC	7.3% - 8.6%	7.9%

WACC

002129.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.44	1.61

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.50%	15.10%

Tax rate	8.80%	11.90%
Debt/Equity ratio	1.57	1.57
Cost of debt	5.00%	5.00%

After-tax WACC	7.3%	8.6%


Selected WACC	7.9%

002129.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 002129.SZ:

cost_of_equity (13.30%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.44) + 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.