002204.SZ WACC - Weighted Average Cost of Capital

The WACC of Dalian Huarui Heavy Industry Group Co Ltd (002204.SZ) is 9.0%.

The Cost of Equity of Dalian Huarui Heavy Industry Group Co Ltd (002204.SZ) is 11.05%.

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

	Range	Selected
Cost of equity	9.70% - 12.40%	11.05%
Tax rate	12.60% - 24.30%	18.45%
Cost of debt	5.00% - 5.00%	5.00%
WACC	8.2% - 9.9%	9.0%

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	1.15	1.23

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.70%	12.40%

Tax rate	12.60%	24.30%
Debt/Equity ratio	0.41	0.41
Cost of debt	5.00%	5.00%

After-tax WACC	8.2%	9.9%


Selected WACC	9.0%

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 (11.05%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.15) + 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.