002862.SZ
Shifeng Cultural Development Co Ltd
Price:  
24.25 
CNY
Volume:  
6,537,750.00
China | Leisure Products
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002862.SZ WACC - Weighted Average Cost of Capital

The WACC of Shifeng Cultural Development Co Ltd (002862.SZ) is 8.9%.

The Cost of Equity of Shifeng Cultural Development Co Ltd (002862.SZ) is 9.15%.
The Cost of Debt of Shifeng Cultural Development Co Ltd (002862.SZ) is 5.00%.

Range Selected
Cost of equity 6.90% - 11.40% 9.15%
Tax rate 3.10% - 7.30% 5.20%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.8% - 11.0% 8.9%
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 0.69 1.08
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.90% 11.40%
Tax rate 3.10% 7.30%
Debt/Equity ratio 0.06 0.06
Cost of debt 5.00% 5.00%
After-tax WACC 6.8% 11.0%
Selected WACC 8.9%

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 (9.15%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.69) + 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.