The WACC of Zhejiang Unifull Industrial Fibre Co Ltd (002427.SZ) is 8.9%.
Range | Selected | |
Cost of equity | 8.0% - 10.7% | 9.35% |
Tax rate | 4.2% - 4.6% | 4.4% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.7% - 10.2% | 8.9% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.86 | 0.99 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.0% | 10.7% |
Tax rate | 4.2% | 4.6% |
Debt/Equity ratio | 0.11 | 0.11 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.7% | 10.2% |
Selected WACC | 8.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
002427.SZ | Zhejiang Unifull Industrial Fibre Co Ltd | 0.11 | 1.29 | 1.17 |
000850.SZ | Anhui Huamao Textile Co Ltd | 0.48 | 1.11 | 0.76 |
000936.SZ | Jiangsu Huaxicun Co Ltd | 0.18 | 1.67 | 1.43 |
002397.SZ | Hunan Mendale Hometextile Co Ltd | 0.26 | 0.76 | 0.61 |
2111.HK | Best Pacific International Holdings Ltd | 0.78 | 0.58 | 0.33 |
600070.SS | Zhejiang Furun Digital Technology Co Ltd | 0.49 | 0.23 | 0.15 |
600448.SS | Huafang Co Ltd | 0.68 | 1.36 | 0.82 |
601599.SS | Zhewen Pictures Group Co Ltd | 0.2 | 1.19 | 0.99 |
603365.SS | Shanghai Shuixing Home Textile Co Ltd | 0.02 | 1.09 | 1.07 |
603889.SS | Zhejiang Xinao Textiles Inc | 0.33 | 0.87 | 0.66 |
Low | High | |
Unlevered beta | 0.72 | 0.89 |
Relevered beta | 0.79 | 0.99 |
Adjusted relevered beta | 0.86 | 0.99 |
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 002427.SZ:
cost_of_equity (9.35%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.86) + 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.