The WACC of Xining Special Steel Co Ltd (600117.SS) is 6.7%.
Range | Selected | |
Cost of equity | 5.5% - 9.5% | 7.5% |
Tax rate | 1.7% - 2.3% | 2% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.3% - 8.0% | 6.7% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.45 | 0.81 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.5% | 9.5% |
Tax rate | 1.7% | 2.3% |
Debt/Equity ratio | 0.46 | 0.46 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.3% | 8.0% |
Selected WACC | 6.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
600117.SS | Xining Special Steel Co Ltd | 0.46 | 1.94 | 1.34 |
002132.SZ | Henan Hengxing Science & Technology Co Ltd | 0.77 | 1.05 | 0.6 |
1266.HK | Xiwang Special Steel Co Ltd | 207.07 | 0.97 | 0 |
1589.TW | Yeong Guan Energy Technology Group Co Ltd | 4.31 | 0.82 | 0.16 |
2738.HK | Huajin International Holdings Ltd | 15.87 | 0.86 | 0.05 |
600408.SS | Shanxi Antai Group Co Ltd | 0.53 | 1.3 | 0.86 |
600740.SS | ShanXi Coking Co Ltd | 1.08 | 1.14 | 0.55 |
6885.HK | Henan Jinma Energy Co Ltd | 7.41 | 0.71 | 0.09 |
6890.HK | Kangli International Holdings Ltd | 1.47 | 0.2 | 0.08 |
826.HK | Tiangong International Co Ltd | 0.65 | 0.75 | 0.46 |
Low | High | |
Unlevered beta | 0.13 | 0.5 |
Relevered beta | 0.18 | 0.72 |
Adjusted relevered beta | 0.45 | 0.81 |
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 600117.SS:
cost_of_equity (7.50%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.45) + 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.