600020.SS WACC - Weighted Average Cost of Capital
The WACC of Henan Zhongyuan Expressway Co Ltd (600020.SS) is 5.1%.
| Range | Selected | |
| Cost of equity | 7.6% - 10.6% | 9.1% |
| Tax rate | 21.6% - 23.1% | 22.35% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 4.8% - 5.5% | 5.1% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.81 | 0.97 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.6% | 10.6% |
| Tax rate | 21.6% | 23.1% |
| Debt/Equity ratio | 3.18 | 3.18 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 4.8% | 5.5% |
| Selected WACC | 5.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 600020.SS | Henan Zhongyuan Expressway Co Ltd | 3.18 | 0.71 | 0.2 |
| 000429.SZ | Guangdong Provincial Expressway Development Co Ltd | 0.26 | 0.04 | 0.03 |
| 1576.HK | Qilu Expressway Co Ltd | 1.9 | 0.31 | 0.13 |
| 1785.HK | Chengdu Expressway Co Ltd | 0.79 | 0.31 | 0.19 |
| 600012.SS | Anhui Expressway Co Ltd | 0.28 | 0.37 | 0.31 |
| 600033.SS | Fujian Expressway Development Co Ltd | 0.14 | 0.63 | 0.57 |
| 600269.SS | Jiangxi Ganyue Expressway Co Ltd | 1 | 0.97 | 0.55 |
| 600368.SS | Guangxi Wuzhou Communications Co Ltd | 0.35 | 0.6 | 0.48 |
| 600548.SS | Shenzhen Expressway Co Ltd | 1.17 | 0.39 | 0.2 |
| 601107.SS | Sichuan Expressway Co Ltd | 2.18 | 0.69 | 0.26 |
| Low | High | |
| Unlevered beta | 0.2 | 0.28 |
| Relevered beta | 0.72 | 0.96 |
| Adjusted relevered beta | 0.81 | 0.97 |
600020.SS'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 600020.SS:
cost_of_equity (9.10%) = 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.