002543.SZ WACC - Weighted Average Cost of Capital

The WACC of Guangdong Vanward New Electric Co Ltd (002543.SZ) is 8.5%.

The Cost of Equity of Guangdong Vanward New Electric Co Ltd (002543.SZ) is 9.40%.

The Cost of Debt of Guangdong Vanward New Electric Co Ltd (002543.SZ) is 5.00%.

	Range	Selected
Cost of equity	7.90% - 10.90%	9.40%
Tax rate	13.70% - 14.10%	13.90%
Cost of debt	5.00% - 5.00%	5.00%
WACC	7.3% - 9.8%	8.5%

WACC

002543.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.85	1.01

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	10.90%

Tax rate	13.70%	14.10%
Debt/Equity ratio	0.2	0.2
Cost of debt	5.00%	5.00%

After-tax WACC	7.3%	9.8%


Selected WACC	8.5%

002543.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 002543.SZ:

cost_of_equity (9.40%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.85) + 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.