002642.SZ WACC - Weighted Average Cost of Capital
The WACC of Ronglian Group Ltd (002642.SZ) is 8.3%.
| Range | Selected | |
| Cost of equity | 7.1% - 9.9% | 8.5% |
| Tax rate | 6.5% - 9.6% | 8.05% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.0% - 9.6% | 8.3% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.72 | 0.87 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.1% | 9.9% |
| Tax rate | 6.5% | 9.6% |
| Debt/Equity ratio | 0.05 | 0.05 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.0% | 9.6% |
| Selected WACC | 8.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 002642.SZ | Ronglian Group Ltd | 0.05 | 1.35 | 1.29 |
| 000948.SZ | Yunnan Nantian Electronics Information Co Ltd | 0.39 | 0.41 | 0.3 |
| 002184.SZ | Shanghai Hi-Tech Control System Co Ltd | 0.25 | 0.31 | 0.25 |
| 1900.HK | China ITS Holdings Co Ltd | 0.82 | 0.73 | 0.41 |
| 300020.SZ | Enjoyor Co Ltd | 0.52 | 1.05 | 0.71 |
| 300231.SZ | Beijing Trust & Far Technology Co Ltd | 0.14 | 1.82 | 1.62 |
| 300310.SZ | Eastone Century Technology Co Ltd | 0.02 | 1.98 | 1.94 |
| 600242.SS | Zhongchang Big Data Corp Ltd | 3.1 | 1.32 | 0.34 |
| 600288.SS | Daheng New Epoch Technology Inc | 0.03 | 0.9 | 0.87 |
| 603869.SS | ENC Digital Technology Co Ltd | 0.04 | 0.69 | 0.66 |
| Low | High | |
| Unlevered beta | 0.56 | 0.78 |
| Relevered beta | 0.58 | 0.81 |
| Adjusted relevered beta | 0.72 | 0.87 |
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 (8.50%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.72) + 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.