The WACC of Sichuan Langsha Holding Ltd (600137.SS) is 6.8%.
Range | Selected | |
Cost of equity | 5.1% - 8.5% | 6.8% |
Tax rate | 8.1% - 10.1% | 9.1% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.1% - 8.4% | 6.8% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.39 | 0.68 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.1% | 8.5% |
Tax rate | 8.1% | 10.1% |
Debt/Equity ratio | 0.02 | 0.02 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.1% | 8.4% |
Selected WACC | 6.8% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
600137.SS | Sichuan Langsha Holding Ltd | 0.02 | 0.9 | 0.89 |
002494.SZ | Huasi Holding Co Ltd | 0.13 | 0.96 | 0.87 |
002569.SZ | Zhejiang Busen Garments Co Ltd | 0.02 | -0.13 | -0.13 |
002762.SZ | Jinfa Labi Maternity & Baby Articles Co Ltd | 0.01 | 1.25 | 1.25 |
1425.HK | Justin Allen Holdings Ltd | 0.03 | 0.11 | 0.1 |
1532.HK | China Partytime Culture Holdings Ltd | 0.15 | 0.09 | 0.08 |
1906.HK | Bonny International Holding Ltd | 0.37 | -0.46 | -0.34 |
600385.SS | Shandong Jintai Group Co Ltd | 0.07 | 0.92 | 0.86 |
837.HK | Carpenter Tan Holdings Ltd | 0.01 | 0.28 | 0.28 |
8471.HK | Reach New Holdings Ltd | 0.01 | -0.37 | -0.36 |
Low | High | |
Unlevered beta | 0.09 | 0.51 |
Relevered beta | 0.09 | 0.52 |
Adjusted relevered beta | 0.39 | 0.68 |
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 600137.SS:
cost_of_equity (6.80%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.39) + 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.