002264.SZ WACC - Weighted Average Cost of Capital

The WACC of New Huadu Supercenter Co Ltd (002264.SZ) is 7.3%.

The Cost of Equity of New Huadu Supercenter Co Ltd (002264.SZ) is 8.20%.

The Cost of Debt of New Huadu Supercenter Co Ltd (002264.SZ) is 5.00%.

	Range	Selected
Cost of equity	6.70% - 9.70%	8.20%
Tax rate	10.50% - 11.10%	10.80%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.2% - 8.4%	7.3%

WACC

002264.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.66	0.84

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.70%	9.70%

Tax rate	10.50%	11.10%
Debt/Equity ratio	0.33	0.33
Cost of debt	5.00%	5.00%

After-tax WACC	6.2%	8.4%


Selected WACC	7.3%

002264.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 002264.SZ:

cost_of_equity (8.20%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.66) + 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.