The WACC of Beijing Global Safety Technology Co Ltd (300523.SZ) is 10.5%.
Range | Selected | |
Cost of equity | 9.6% - 13.6% | 11.6% |
Tax rate | 15.4% - 17.6% | 16.5% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 8.8% - 12.2% | 10.5% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 1.13 | 1.39 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.6% | 13.6% |
Tax rate | 15.4% | 17.6% |
Debt/Equity ratio | 0.18 | 0.18 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 8.8% | 12.2% |
Selected WACC | 10.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
300523.SZ | Beijing Global Safety Technology Co Ltd | 0.18 | 1.44 | 1.25 |
003029.SZ | Jilin University Zhengyuan Information Technologies Co Ltd | 0.01 | 1.62 | 1.61 |
1588.HK | Chanjet Information Technology Co Ltd | 0 | 0.61 | 0.61 |
300096.SZ | YLZ Information Technology Co Ltd | 0.02 | 0.93 | 0.92 |
300297.SZ | Bluedon Information Security Technologies Co Ltd | 13.11 | 0.4 | 0.03 |
300311.SZ | Surfilter Network Technology Co Ltd | 0.02 | 1.81 | 1.79 |
300579.SZ | BeiJing Certificate Authority Co Ltd | 0 | 1.57 | 1.57 |
600271.SS | Aisino Corp | 0.05 | 1.16 | 1.12 |
600756.SS | Inspur Software Co Ltd | 0 | 1.85 | 1.85 |
603636.SS | Linewell Software Co Ltd | 0.22 | 1.03 | 0.87 |
Low | High | |
Unlevered beta | 1.04 | 1.38 |
Relevered beta | 1.19 | 1.58 |
Adjusted relevered beta | 1.13 | 1.39 |
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 300523.SZ:
cost_of_equity (11.60%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.13) + 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.