002585.SZ WACC - Weighted Average Cost of Capital

The WACC of Jiangsu Shuangxing Color Plastic New Materials Co Ltd (002585.SZ) is 7.4%.

The Cost of Equity of Jiangsu Shuangxing Color Plastic New Materials Co Ltd (002585.SZ) is 9.30%.

The Cost of Debt of Jiangsu Shuangxing Color Plastic New Materials Co Ltd (002585.SZ) is 5.00%.

	Range	Selected
Cost of equity	5.10% - 13.50%	9.30%
Tax rate	13.20% - 16.40%	14.80%
Cost of debt	5.00% - 5.00%	5.00%
WACC	4.8% - 10.0%	7.4%

WACC

002585.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.39	1.38

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.10%	13.50%

Tax rate	13.20%	16.40%
Debt/Equity ratio	0.6	0.6
Cost of debt	5.00%	5.00%

After-tax WACC	4.8%	10.0%


Selected WACC	7.4%

002585.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 002585.SZ:

cost_of_equity (9.30%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.39) + 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.