The WACC of Shenzhen Kstar Science & Technology Co Ltd (002518.SZ) is 10.3%.
Range | Selected | |
Cost of equity | 9.5% - 12.1% | 10.8% |
Tax rate | 12.4% - 14.1% | 13.25% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 9.1% - 11.5% | 10.3% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 1.11 | 1.18 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.5% | 12.1% |
Tax rate | 12.4% | 14.1% |
Debt/Equity ratio | 0.07 | 0.07 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 9.1% | 11.5% |
Selected WACC | 10.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
002518.SZ | Shenzhen Kstar Science & Technology Co Ltd | 0.07 | 1.6 | 1.51 |
000541.SZ | Foshan Electrical and Lighting Co Ltd | 0.32 | 1.15 | 0.9 |
000922.SZ | Harbin Electric Corporation Jiamusi Electric Machine Co Ltd | 0.36 | 1.44 | 1.11 |
002121.SZ | Shenzhen Clou Electronics Co Ltd | 0.51 | 1.23 | 0.85 |
002733.SZ | Shenzhen Center Power Tech Co Ltd | 0.21 | 0.58 | 0.49 |
300438.SZ | Guangzhou Great Power Energy and Technology Co Ltd | 0.45 | 1.77 | 1.28 |
300602.SZ | Shenzhen FRD Science & Technology Co Ltd | 0.15 | 1.84 | 1.63 |
600478.SS | Hunan Corun New Energy Co Ltd | 0.47 | 1.6 | 1.13 |
603855.SS | Warom Technology Incorporated Co | 0.09 | 1.49 | 1.38 |
605066.SS | Zhejiang Tengen Electrics Co Ltd | 0.03 | 1.12 | 1.09 |
Low | High | |
Unlevered beta | 1.1 | 1.19 |
Relevered beta | 1.16 | 1.27 |
Adjusted relevered beta | 1.11 | 1.18 |
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 002518.SZ:
cost_of_equity (10.80%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.11) + 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.