002540.SZ WACC - Weighted Average Cost of Capital

The WACC of Jiangsu Asia-Pacific Light Alloy Technology Co Ltd (002540.SZ) is 11.5%.

The Cost of Equity of Jiangsu Asia-Pacific Light Alloy Technology Co Ltd (002540.SZ) is 12.90%.

The Cost of Debt of Jiangsu Asia-Pacific Light Alloy Technology Co Ltd (002540.SZ) is 5.00%.

	Range	Selected
Cost of equity	11.50% - 14.30%	12.90%
Tax rate	10.60% - 11.60%	11.10%
Cost of debt	5.00% - 5.00%	5.00%
WACC	10.3% - 12.8%	11.5%

WACC

002540.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.43	1.5

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.50%	14.30%

Tax rate	10.60%	11.60%
Debt/Equity ratio	0.19	0.19
Cost of debt	5.00%	5.00%

After-tax WACC	10.3%	12.8%


Selected WACC	11.5%

002540.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 002540.SZ:

cost_of_equity (12.90%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.43) + 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.