002264.SZ WACC - Weighted Average Cost of Capital

The WACC of New Huadu Supercenter Co Ltd (002264.SZ) is 6.0%.

The Cost of Equity of New Huadu Supercenter Co Ltd (002264.SZ) is 6.40%.

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

	Range	Selected
Cost of equity	5.50% - 7.30%	6.40%
Tax rate	10.50% - 11.10%	10.80%
Cost of debt	5.00% - 5.00%	5.00%
WACC	5.3% - 6.7%	6.0%

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	0.46	0.5

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.50%	7.30%

Tax rate	10.50%	11.10%
Debt/Equity ratio	0.27	0.27
Cost of debt	5.00%	5.00%

After-tax WACC	5.3%	6.7%


Selected WACC	6.0%

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 (6.40%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.46) + 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.