002642.SZ WACC - Weighted Average Cost of Capital
The WACC of Ronglian Group Ltd (002642.SZ) is 8.0%.
| Range | Selected | |
| Cost of equity | 6.8% - 9.6% | 8.2% |
| Tax rate | 6.5% - 9.6% | 8.05% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.7% - 9.4% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.67 | 0.84 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.8% | 9.6% |
| Tax rate | 6.5% | 9.6% |
| Debt/Equity ratio | 0.05 | 0.05 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.7% | 9.4% |
| Selected WACC | 8.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 002642.SZ | Ronglian Group Ltd | 0.05 | 1.34 | 1.28 |
| 000948.SZ | Yunnan Nantian Electronics Information Co Ltd | 0.37 | 0.35 | 0.26 |
| 002184.SZ | Shanghai Hi-Tech Control System Co Ltd | 0.26 | 0.3 | 0.25 |
| 1900.HK | China ITS Holdings Co Ltd | 1.17 | 0.74 | 0.36 |
| 300020.SZ | Enjoyor Co Ltd | 0.54 | 0.84 | 0.56 |
| 300231.SZ | Beijing Trust & Far Technology Co Ltd | 0.15 | 1.82 | 1.6 |
| 300310.SZ | Eastone Century Technology Co Ltd | 0.02 | 1.97 | 1.93 |
| 600242.SS | Zhongchang Big Data Corp Ltd | 3.1 | 1.32 | 0.34 |
| 600288.SS | Daheng New Epoch Technology Inc | 0.04 | 0.96 | 0.92 |
| 603869.SS | ENC Digital Technology Co Ltd | 0.05 | 0.68 | 0.65 |
| Low | High | |
| Unlevered beta | 0.48 | 0.76 |
| Relevered beta | 0.51 | 0.76 |
| Adjusted relevered beta | 0.67 | 0.84 |
002642.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 002642.SZ:
cost_of_equity (8.20%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.67) + 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.