002204.SZ WACC - Weighted Average Cost of Capital

The WACC of Dalian Huarui Heavy Industry Group Co Ltd (002204.SZ) is 10.2%.

The Cost of Equity of Dalian Huarui Heavy Industry Group Co Ltd (002204.SZ) is 12.65%.

The Cost of Debt of Dalian Huarui Heavy Industry Group Co Ltd (002204.SZ) is 5.00%.

	Range	Selected
Cost of equity	11.20% - 14.10%	12.65%
Tax rate	12.60% - 24.30%	18.45%
Cost of debt	5.00% - 5.00%	5.00%
WACC	9.3% - 11.2%	10.2%

WACC

002204.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.39	1.46

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.20%	14.10%

Tax rate	12.60%	24.30%
Debt/Equity ratio	0.39	0.39
Cost of debt	5.00%	5.00%

After-tax WACC	9.3%	11.2%


Selected WACC	10.2%

002204.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 002204.SZ:

cost_of_equity (12.65%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.39) + 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.