The WACC of China Tontine Wines Group Ltd (389.HK) is 8.0%.
Range | Selected | |
Cost of equity | 10.1% - 13.9% | 12% |
Tax rate | 22.1% - 22.3% | 22.2% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.0% - 8.9% | 8.0% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 1.22 | 1.44 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 10.1% | 13.9% |
Tax rate | 22.1% | 22.3% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.0% | 8.9% |
Selected WACC | 8.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
389.HK | China Tontine Wines Group Ltd | 0.82 | 0.13 | 0.08 |
000869.SZ | Yantai Changyu Pioneer Wine Co Ltd | 0.03 | 1.07 | 1.04 |
600059.SS | Zhejiang Guyuelongshan Shaoxing Wine Co Ltd | 0 | 0.91 | 0.91 |
600084.SS | Citic Guoan Wine Co Ltd | 0.01 | 1.18 | 1.17 |
600365.SS | Tonghua Grape Wine Co Ltd | 0.22 | 0.64 | 0.55 |
600543.SS | Gansu Mogao Industrial Development Co Ltd | 0.03 | 0.23 | 0.22 |
600616.SS | Shanghai Jinfeng Wine Co Ltd | 0.02 | 0.97 | 0.96 |
601579.SS | Kuaijishan Shaoxing Rice Wine Co Ltd | 0.01 | 0.98 | 0.97 |
603779.SS | Weilong Grape Wine Co Ltd | 0.1 | 0.95 | 0.88 |
8146.HK | Grace Wine Holdings Ltd | 0.74 | -0.24 | -0.15 |
BKV.SI | Dukang Distillers Holdings Ltd | 0.37 | -0.64 | -0.5 |
Low | High | |
Unlevered beta | 0.55 | 0.91 |
Relevered beta | 1.33 | 1.66 |
Adjusted relevered beta | 1.22 | 1.44 |
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 389.HK:
cost_of_equity (12.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.22) + 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.