002731.SZ WACC - Weighted Average Cost of Capital

The WACC of Shenyang Cuihua Gold and Silver Jewelry Co Ltd (002731.SZ) is 8.6%.

The Cost of Equity of Shenyang Cuihua Gold and Silver Jewelry Co Ltd (002731.SZ) is 12.20%.

The Cost of Debt of Shenyang Cuihua Gold and Silver Jewelry Co Ltd (002731.SZ) is 5.00%.

	Range	Selected
Cost of equity	10.80% - 13.60%	12.20%
Tax rate	34.70% - 36.90%	35.80%
Cost of debt	5.00% - 5.00%	5.00%
WACC	7.8% - 9.5%	8.6%

WACC

002731.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.32	1.39

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.80%	13.60%

Tax rate	34.70%	36.90%
Debt/Equity ratio	0.65	0.65
Cost of debt	5.00%	5.00%

After-tax WACC	7.8%	9.5%


Selected WACC	8.6%

002731.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 002731.SZ:

cost_of_equity (12.20%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.32) + 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.