002862.SZ WACC - Weighted Average Cost of Capital

The WACC of Shifeng Cultural Development Co Ltd (002862.SZ) is 10.1%.

The Cost of Equity of Shifeng Cultural Development Co Ltd (002862.SZ) is 10.40%.

The Cost of Debt of Shifeng Cultural Development Co Ltd (002862.SZ) is 5.00%.

	Range	Selected
Cost of equity	8.60% - 12.20%	10.40%
Tax rate	3.10% - 10.50%	6.80%
Cost of debt	5.00% - 5.00%	5.00%
WACC	8.4% - 11.8%	10.1%

WACC

002862.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.96	1.2

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.60%	12.20%

Tax rate	3.10%	10.50%
Debt/Equity ratio	0.06	0.06
Cost of debt	5.00%	5.00%

After-tax WACC	8.4%	11.8%


Selected WACC	10.1%

002862.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 002862.SZ:

cost_of_equity (10.40%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.96) + 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.