600021.SS WACC - Weighted Average Cost of Capital
The WACC of Shanghai Electric Power Co Ltd (600021.SS) is 5.2%.
| Range | Selected | |
| Cost of equity | 10.4% - 14.4% | 12.4% |
| Tax rate | 22.1% - 29.1% | 25.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.0% - 5.4% | 5.2% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.25 | 1.51 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.4% | 14.4% |
| Tax rate | 22.1% | 29.1% |
| Debt/Equity ratio | 4.77 | 4.77 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.0% | 5.4% |
| Selected WACC | 5.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 600021.SS | Shanghai Electric Power Co Ltd | 4.77 | 1.03 | 0.22 |
| 000027.SZ | Shenzhen Energy Group Co Ltd | 2.61 | 1.04 | 0.35 |
| 000539.SZ | Guangdong Electric Power Development Co Ltd | 5.63 | 0.95 | 0.18 |
| 000543.SZ | An Hui Wenergy Co Ltd | 2.29 | 0.56 | 0.2 |
| 000600.SZ | Jointo Energy Investment Co Ltd Hebei | 1.9 | 1.33 | 0.54 |
| 000883.SZ | Hubei Energy Group Co Ltd | 1.61 | 0.8 | 0.36 |
| 579.HK | Beijing Jingneng Clean Energy Co Ltd | 3 | 0.63 | 0.19 |
| 600098.SS | Guangzhou Development Group Inc | 1.56 | 0.9 | 0.41 |
| 600578.SS | Beijing Jingneng Power Co Ltd | 1.62 | 0.9 | 0.4 |
| 600863.SS | Inner Mongolia MengDian HuaNeng Thermal Power Corp Ltd | 0.46 | 0.68 | 0.51 |
| Low | High | |
| Unlevered beta | 0.3 | 0.38 |
| Relevered beta | 1.37 | 1.76 |
| Adjusted relevered beta | 1.25 | 1.51 |
600021.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 600021.SS:
cost_of_equity (12.40%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.25) + 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.