The WACC of China Machinery Engineering Corp (1829.HK) is 9.4%.
Range | Selected | |
Cost of equity | 8.1% - 11.2% | 9.65% |
Tax rate | 24.1% - 24.3% | 24.2% |
Cost of debt | 4.0% - 10.2% | 7.1% |
WACC | 7.8% - 11.0% | 9.4% |
Category | Low | High |
Long-term bond rate | 3.0% | 3.5% |
Equity market risk premium | 5.3% | 6.3% |
Adjusted beta | 0.96 | 1.13 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.1% | 11.2% |
Tax rate | 24.1% | 24.3% |
Debt/Equity ratio | 0.07 | 0.07 |
Cost of debt | 4.0% | 10.2% |
After-tax WACC | 7.8% | 11.0% |
Selected WACC | 9.4% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
1829.HK | China Machinery Engineering Corp | 0.07 | 1.13 | 1.07 |
1599.HK | Beijing Urban Construction Design & Development Group Co Ltd | 4 | 0.82 | 0.2 |
1963.T | JGC Holdings Corp | 0.1 | 0.96 | 0.89 |
300008.SZ | Bestway Marine & Energy Technology Co Ltd | 0.09 | 1.19 | 1.11 |
300284.SZ | JSTI Group | 0.34 | 1.84 | 1.46 |
601068.SS | China Aluminum International Engineering Corp Ltd | 0.94 | 1 | 0.58 |
601611.SS | China Nuclear Engineering & Construction Corp Ltd | 2.67 | 1.18 | 0.39 |
603959.SS | Hunan Baili Engineering Sci & Tech Co Ltd | 0.31 | 0.22 | 0.18 |
6366.T | Chiyoda Corp | 0.28 | 0.89 | 0.73 |
9979.HK | Greentown Management Holdings Company Ltd | 0 | 0.8 | 0.8 |
Low | High | |
Unlevered beta | 0.67 | 0.83 |
Relevered beta | 0.94 | 1.19 |
Adjusted relevered beta | 0.96 | 1.13 |
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 1829.HK:
cost_of_equity (9.65%) = risk_free_rate (3.25%) + equity_risk_premium (5.80%) * 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.