The WACC of Shandong International Trust Co Ltd (1697.HK) is 10.0%.
Range | Selected | |
Cost of equity | 8.9% - 12.4% | 10.65% |
Tax rate | 25.6% - 38.0% | 31.8% |
Cost of debt | 7.0% - 11.4% | 9.2% |
WACC | 8.4% - 11.7% | 10.0% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 1.01 | 1.22 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.9% | 12.4% |
Tax rate | 25.6% | 38.0% |
Debt/Equity ratio | 0.16 | 0.16 |
Cost of debt | 7.0% | 11.4% |
After-tax WACC | 8.4% | 11.7% |
Selected WACC | 10.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
1697.HK | Shandong International Trust Co Ltd | 0.16 | 0.95 | 0.86 |
000563.SZ | Shaanxi International Trust Co Ltd | 0 | 1.55 | 1.55 |
1835.HK | Shanghai Realway Capital Assets Management Co Ltd | 0.12 | -0.04 | -0.04 |
2799.HK | China Huarong Asset Management Co Ltd | 9.52 | 1.76 | 0.24 |
600053.SS | Kunwu Jiuding Investment Holdings Co Ltd | 0.01 | 1.58 | 1.57 |
600695.SS | Shanghai Greencourt Investment Group Co Ltd | 0.16 | 1.63 | 1.48 |
600816.SS | Anxin Trust Co Ltd | 0.09 | 1.75 | 1.65 |
8739.T | Sparx Group Co Ltd | 0.24 | 1.11 | 0.95 |
MTDS.TA | Meitav Dash Investments Ltd | 2.63 | 0.88 | 0.32 |
PFS.NS | PTC India Financial Services Ltd | 1.07 | 1.75 | 1.02 |
Low | High | |
Unlevered beta | 0.92 | 1.2 |
Relevered beta | 1.01 | 1.33 |
Adjusted relevered beta | 1.01 | 1.22 |
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 1697.HK:
cost_of_equity (10.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.01) + 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.