The WACC of Hebei Yichen Industrial Group Corp Ltd (1596.HK) is 9.1%.
Range | Selected | |
Cost of equity | 9.0% - 12.3% | 10.65% |
Tax rate | 11.6% - 12.0% | 11.8% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.8% - 10.4% | 9.1% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 1.02 | 1.21 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.0% | 12.3% |
Tax rate | 11.6% | 12.0% |
Debt/Equity ratio | 0.33 | 0.33 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.8% | 10.4% |
Selected WACC | 9.1% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
1596.HK | Hebei Yichen Industrial Group Corp Ltd | 0.33 | -0.11 | -0.08 |
000816.SZ | Jiangsu Nonghua Intelligent Agriculture Technology Co Ltd | 0.09 | 1.57 | 1.45 |
002523.SZ | Zhuzhou Tianqiao Crane Co Ltd | 0.11 | 1.19 | 1.08 |
300103.SZ | Dagang Holding Group Co Ltd | 0.07 | 1.13 | 1.06 |
600262.SS | Inner Mongolia North Hauler Joint Stock Co Ltd | 0.21 | 0.8 | 0.67 |
600495.SS | Jinxi Axle Co Ltd | 0.05 | 0.65 | 0.62 |
603966.SS | Eurocrane China Co Ltd | 0.26 | 1.22 | 0.99 |
605001.SS | Qingdao Victall Railway Co Ltd | 0.46 | 1.25 | 0.88 |
605100.SS | Power HF Co Ltd | 0.06 | 0.68 | 0.65 |
688569.SS | Beijing Tieke Shougang Railway Tech Co Ltd | 0.02 | 1.16 | 1.14 |
Low | High | |
Unlevered beta | 0.8 | 1.02 |
Relevered beta | 1.03 | 1.31 |
Adjusted relevered beta | 1.02 | 1.21 |
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 1596.HK:
cost_of_equity (10.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.02) + 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.