The WACC of ZHEJIANG NARADA POWER SOURCE Co Ltd (300068.SZ) is 7.0%.
Range | Selected | |
Cost of equity | 6.7% - 10.5% | 8.6% |
Tax rate | 2.8% - 6.1% | 4.45% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.9% - 8.1% | 7.0% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.65 | 0.96 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.7% | 10.5% |
Tax rate | 2.8% | 6.1% |
Debt/Equity ratio | 0.72 | 0.72 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.9% | 8.1% |
Selected WACC | 7.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
300068.SZ | ZHEJIANG NARADA POWER SOURCE Co Ltd | 0.72 | 1.31 | 0.77 |
002249.SZ | Zhongshan Broad-Ocean Motor Co Ltd | 0.2 | 0.88 | 0.74 |
002276.SZ | Zhejiang Wanma Co Ltd | 0.49 | 0.98 | 0.66 |
002309.SZ | Jiangsu Zhongli Group Co Ltd | 0.13 | 0.1 | 0.09 |
1399.HK | Veson Holdings Ltd | 6.31 | 0.3 | 0.04 |
505.HK | Xingye Alloy Materials Group Ltd | 1.64 | 0.09 | 0.03 |
600312.SS | Henan Pinggao Electric Co Ltd | 0.15 | 0.61 | 0.53 |
601311.SS | Camel Group Co Ltd | 0.26 | 0.75 | 0.6 |
601567.SS | Ningbo Sanxing Medical Electric Co Ltd | 0.18 | 0.26 | 0.22 |
605222.SS | Shanghai QiFan Cable Co Ltd | 1.12 | 0.68 | 0.33 |
Low | High | |
Unlevered beta | 0.28 | 0.56 |
Relevered beta | 0.48 | 0.94 |
Adjusted relevered beta | 0.65 | 0.96 |
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 300068.SZ:
cost_of_equity (8.60%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.65) + 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.