The WACC of China CSSC Holdings Ltd (600150.SS) is 8.4%.
Range | Selected | |
Cost of equity | 7.7% - 10.1% | 8.9% |
Tax rate | 13.0% - 22.4% | 17.7% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.3% - 9.4% | 8.4% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.82 | 0.9 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.7% | 10.1% |
Tax rate | 13.0% | 22.4% |
Debt/Equity ratio | 0.12 | 0.12 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.3% | 9.4% |
Selected WACC | 8.4% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
600150.SS | China CSSC Holdings Ltd | 0.12 | 1.06 | 0.96 |
000528.SZ | Guangxi Liugong Machinery Co Ltd | 0.81 | 0.75 | 0.45 |
1839.HK | CIMC Vehicles Group Co Ltd | 0.12 | 1.02 | 0.93 |
600066.SS | Zhengzhou Yutong Bus Co Ltd | 0.03 | 0.35 | 0.34 |
600320.SS | Shanghai Zhenhua Heavy Industries Co Ltd | 1.71 | 0.96 | 0.4 |
600685.SS | CSSC Offshore & Marine Engineering Group Co Ltd | 0.28 | 0.83 | 0.67 |
600967.SS | Inner Mongolia First Machinery Group Co Ltd | 0.08 | 1.13 | 1.06 |
601717.SS | Zhengzhou Coal Mining Machinery Group Co Ltd | 0.35 | 1.09 | 0.85 |
601989.SS | China Shipbuilding Industry Co Ltd | 0.34 | 0.94 | 0.73 |
631.HK | Sany Heavy Equipment International Holdings Company Ltd | 0.45 | 0.9 | 0.66 |
Low | High | |
Unlevered beta | 0.67 | 0.78 |
Relevered beta | 0.73 | 0.85 |
Adjusted relevered beta | 0.82 | 0.9 |
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 600150.SS:
cost_of_equity (8.90%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.82) + 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.