002338.SZ WACC - Weighted Average Cost of Capital

The WACC of Changchun UP Optotech Co Ltd (002338.SZ) is 10.7%.

The Cost of Equity of Changchun UP Optotech Co Ltd (002338.SZ) is 10.85%.

The Cost of Debt of Changchun UP Optotech Co Ltd (002338.SZ) is 5.00%.

	Range	Selected
Cost of equity	9.40% - 12.30%	10.85%
Tax rate	2.70% - 3.20%	2.95%
Cost of debt	5.00% - 5.00%	5.00%
WACC	9.3% - 12.1%	10.7%

WACC

002338.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.1	1.21

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.40%	12.30%

Tax rate	2.70%	3.20%
Debt/Equity ratio	0.03	0.03
Cost of debt	5.00%	5.00%

After-tax WACC	9.3%	12.1%


Selected WACC	10.7%

002338.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 002338.SZ:

cost_of_equity (10.85%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.1) + 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.