300878.SZ WACC - Weighted Average Cost of Capital
The WACC of Zhejiang Wecome Pharmaceutical Co Ltd (300878.SZ) is 8.7%.
| Range | Selected | |
| Cost of equity | 7.6% - 10.9% | 9.25% |
| Tax rate | 7.6% - 10.9% | 9.25% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.3% - 10.2% | 8.7% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.81 | 1.01 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.6% | 10.9% |
| Tax rate | 7.6% | 10.9% |
| Debt/Equity ratio | 0.12 | 0.12 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.3% | 10.2% |
| Selected WACC | 8.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 300878.SZ | Zhejiang Wecome Pharmaceutical Co Ltd | 0.12 | 1.36 | 1.22 |
| 000952.SZ | Hubei Guangji Pharmaceutical Co Ltd | 0.47 | 0.76 | 0.53 |
| 002118.SZ | Jilin Zixin Pharmaceutical Industrial Co Ltd | 13.67 | 1.11 | 0.08 |
| 002198.SZ | Guangdong Jiaying Pharmaceutical Co Ltd | 0 | 0.68 | 0.68 |
| 002644.SZ | Lanzhou Foci Pharmaceutical Co Ltd | 0.02 | 1.18 | 1.17 |
| 1652.HK | Fusen Pharmaceutical Co Ltd | 1.66 | -0.28 | -0.11 |
| 600080.SS | Ginwa Enterprise Group Inc | 0.08 | 0.79 | 0.74 |
| 603079.SS | Zhejiang Shengda Bio-Pharm Co Ltd | 0.12 | 0.64 | 0.58 |
| 603676.SS | Tibet Weixinkang Medicine Co Ltd | 0 | 1.27 | 1.26 |
| 688566.SS | Jiangsu Jibeier Pharmaceutical Co Ltd | 0.01 | 1.26 | 1.25 |
| Low | High | |
| Unlevered beta | 0.64 | 0.91 |
| Relevered beta | 0.72 | 1.01 |
| Adjusted relevered beta | 0.81 | 1.01 |
300878.SZ's CAPM model and how its cost of Equity is calculated
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 300878.SZ:
cost_of_equity (9.25%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.81) + 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.