002895.SZ WACC - Weighted Average Cost of Capital

The WACC of Guizhou Chanhen Chemical Corp (002895.SZ) is 8.4%.

The Cost of Equity of Guizhou Chanhen Chemical Corp (002895.SZ) is 9.80%.

The Cost of Debt of Guizhou Chanhen Chemical Corp (002895.SZ) is 5.00%.

	Range	Selected
Cost of equity	8.70% - 10.90%	9.80%
Tax rate	17.60% - 18.30%	17.95%
Cost of debt	5.00% - 5.00%	5.00%
WACC	7.6% - 9.2%	8.4%

WACC

002895.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.98	1.01

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.70%	10.90%

Tax rate	17.60%	18.30%
Debt/Equity ratio	0.33	0.33
Cost of debt	5.00%	5.00%

After-tax WACC	7.6%	9.2%


Selected WACC	8.4%

002895.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 002895.SZ:

cost_of_equity (9.80%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.98) + 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.