The WACC of BYD Co Ltd (002594.SZ) is 8.1%.
Range | Selected | |
Cost of equity | 7.7% - 10.1% | 8.9% |
Tax rate | 14.6% - 15.9% | 15.25% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.2% - 9.1% | 8.1% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.82 | 0.9 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.7% | 10.1% |
Tax rate | 14.6% | 15.9% |
Debt/Equity ratio | 0.19 | 0.19 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.2% | 9.1% |
Selected WACC | 8.1% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
002594.SZ | BYD Co Ltd | 0.19 | 0.95 | 0.82 |
000625.SZ | Chongqing Changan Automobile Co Ltd | 0.29 | 1.12 | 0.9 |
000800.SZ | FAW Jiefang Group Co Ltd | 0.46 | 0.77 | 0.56 |
1958.HK | BAIC Motor Corp Ltd | 0.61 | 0.92 | 0.61 |
489.HK | Dongfeng Motor Group Co Ltd | 3.76 | 1.08 | 0.26 |
600166.SS | Beiqi Foton Motor Co Ltd | 0.7 | 1.03 | 0.64 |
600418.SS | Anhui Jianghuai Automobile Group Corp Ltd | 0.23 | 0.55 | 0.46 |
600733.SS | BAIC BluePark New Energy Technology Co Ltd | 0.48 | 1.63 | 1.16 |
601238.SS | Guangzhou Automobile Group Co Ltd | 0.73 | 1.1 | 0.68 |
601633.SS | Great Wall Motor Co Ltd | 0.31 | 1.11 | 0.88 |
Low | High | |
Unlevered beta | 0.63 | 0.73 |
Relevered beta | 0.73 | 0.85 |
Adjusted relevered beta | 0.82 | 0.9 |
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 002594.SZ:
cost_of_equity (8.90%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.82) + 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.