The WACC of Shanghai Maling Aquarius Co Ltd (600073.SS) is 7.1%.
Range | Selected | |
Cost of equity | 7.4% - 10.2% | 8.8% |
Tax rate | 25.0% - 25.0% | 25% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.2% - 8.0% | 7.1% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.78 | 0.92 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.4% | 10.2% |
Tax rate | 25.0% | 25.0% |
Debt/Equity ratio | 0.53 | 0.53 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.2% | 8.0% |
Selected WACC | 7.1% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
600073.SS | Shanghai Maling Aquarius Co Ltd | 0.53 | 0.68 | 0.48 |
000505.SZ | Hainan Jingliang Holdings Co Ltd | 0.47 | 0.64 | 0.47 |
002567.SZ | Tangrenshen Group Co Ltd | 1.09 | 1.22 | 0.67 |
002726.SZ | Shandong Longda Meat Foodstuff Co Ltd | 0.52 | 0.91 | 0.65 |
1230.HK | Yashili International Holdings Ltd | 0.11 | 0.07 | 0.07 |
3799.HK | Dali Foods Group Co Ltd | 0.12 | 0.39 | 0.35 |
3999.HK | Dachan Food (Asia) Ltd | 1.04 | 0.12 | 0.07 |
600597.SS | Bright Dairy and Food Co Ltd | 0.3 | 0.97 | 0.79 |
600737.SS | COFCO Sugar Holding Co Ltd | 0.22 | 0.71 | 0.61 |
600873.SS | MeiHua Holdings Group Co Ltd | 0.17 | 0.84 | 0.75 |
Low | High | |
Unlevered beta | 0.48 | 0.63 |
Relevered beta | 0.67 | 0.88 |
Adjusted relevered beta | 0.78 | 0.92 |
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 600073.SS:
cost_of_equity (8.80%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.78) + 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.