The WACC of Guangdong VTR Bio-Tech Co Ltd (300381.SZ) is 9.9%.
Range | Selected | |
Cost of equity | 8.4% - 11.7% | 10.05% |
Tax rate | 7.4% - 11.1% | 9.25% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 8.4% - 11.5% | 9.9% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.94 | 1.13 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.4% | 11.7% |
Tax rate | 7.4% | 11.1% |
Debt/Equity ratio | 0.02 | 0.02 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 8.4% | 11.5% |
Selected WACC | 9.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
300381.SZ | Guangdong VTR Bio-Tech Co Ltd | 0.02 | 1.34 | 1.32 |
002022.SZ | Shanghai Kehua Bio-Engineering Co Ltd | 0.16 | 1.23 | 1.08 |
300204.SZ | Staidson Beijing BioPharmaceuticals Co Ltd | 0.01 | 1.44 | 1.43 |
300294.SZ | Boya Bio-pharmaceutical Group Co Ltd | 0.02 | 0.74 | 0.73 |
300683.SZ | Wuhan Hiteck Biological Pharma Co Ltd | 0.01 | 1.44 | 1.42 |
603716.SS | Thalys Medical Technology Group Inc | 0.39 | 1.36 | 1.01 |
603739.SS | Qingdao Vland Biotech INC | 0.22 | 1.55 | 1.29 |
688278.SS | Xiamen Amoytop Biotech Co Ltd | 0 | 0.46 | 0.46 |
688336.SS | Sunshine Guojian Pharmaceutical Shanghai Co Ltd | 0 | 0.71 | 0.71 |
8247.HK | Biosino Bio-Technology and Science Inc | 1.87 | 0.63 | 0.23 |
Low | High | |
Unlevered beta | 0.89 | 1.16 |
Relevered beta | 0.91 | 1.19 |
Adjusted relevered beta | 0.94 | 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 300381.SZ:
cost_of_equity (10.05%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.94) + 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.