The WACC of Chongqing Road and Bridge Co Ltd (600106.SS) is 6.1%.
Range | Selected | |
Cost of equity | 5.2% - 7.7% | 6.45% |
Tax rate | 8.8% - 9.2% | 9% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.1% - 7.1% | 6.1% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.42 | 0.57 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.2% | 7.7% |
Tax rate | 8.8% | 9.2% |
Debt/Equity ratio | 0.23 | 0.23 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.1% | 7.1% |
Selected WACC | 6.1% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
600106.SS | Chongqing Road and Bridge Co Ltd | 0.21 | 1.04 | 0.87 |
000429.SZ | Guangdong Provincial Expressway Development Co Ltd | 0.26 | 0.04 | 0.03 |
000548.SZ | Hunan Investment Group Co Ltd | 0.08 | 1.2 | 1.11 |
1576.HK | Qilu Expressway Co Ltd | 1.9 | 0.31 | 0.11 |
1785.HK | Chengdu Expressway Co Ltd | 0.79 | 0.31 | 0.18 |
269.HK | China Resources and Transportation Group Ltd | 117.93 | -0.41 | 0 |
600350.SS | Shandong Hi-speed Co Ltd | 1.49 | 0.22 | 0.1 |
600368.SS | Guangxi Wuzhou Communications Co Ltd | 0.35 | 0.6 | 0.46 |
600377.SS | Jiangsu Expressway Co Ltd | 0.44 | 0.13 | 0.1 |
601518.SS | Jilin Expressway Co Ltd | 0.01 | 0.88 | 0.88 |
Low | High | |
Unlevered beta | 0.11 | 0.29 |
Relevered beta | 0.13 | 0.36 |
Adjusted relevered beta | 0.42 | 0.57 |
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 600106.SS:
cost_of_equity (6.45%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.42) + 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.