The WACC of Guangzhou Baiyun International Airport Co Ltd (600004.SS) is 8.3%.
Range | Selected | |
Cost of equity | 7.3% - 10.4% | 8.85% |
Tax rate | 27.6% - 28.3% | 27.95% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.0% - 9.7% | 8.3% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.76 | 0.94 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.3% | 10.4% |
Tax rate | 27.6% | 28.3% |
Debt/Equity ratio | 0.11 | 0.11 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.0% | 9.7% |
Selected WACC | 8.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
600004.SS | Guangzhou Baiyun International Airport Co Ltd | 0.09 | 0.92 | 0.86 |
000089.SZ | Shenzhen Airport Co Ltd | 0.8 | 0.86 | 0.55 |
002023.SZ | Sichuan Haite High-tech Co Ltd | 0.28 | 1.26 | 1.04 |
300424.SZ | Guangzhou Hangxin Aviation Technology Co Ltd | 0.25 | 2.04 | 1.72 |
357.HK | Hainan Meilan International Airport Co Ltd | 0.67 | 0.81 | 0.55 |
600009.SS | Shanghai International Airport Co Ltd | 0.28 | 1.01 | 0.84 |
600350.SS | Shandong Hi-speed Co Ltd | 1.49 | 0.22 | 0.11 |
600897.SS | Xiamen International Airport Co Ltd | 0.05 | 0.57 | 0.55 |
601880.SS | Liaoning Port Co Ltd | 0.35 | 1.07 | 0.85 |
S58.SI | SATS Ltd | 0.94 | 1.04 | 0.62 |
Low | High | |
Unlevered beta | 0.59 | 0.85 |
Relevered beta | 0.64 | 0.91 |
Adjusted relevered beta | 0.76 | 0.94 |
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 600004.SS:
cost_of_equity (8.85%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.76) + 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.