The WACC of Shanghai Aerospace Automobile Electromechanical Co Ltd (600151.SS) is 9.9%.
Range | Selected | |
Cost of equity | 9.7% - 12.4% | 11.05% |
Tax rate | 27.8% - 41.7% | 34.75% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 8.8% - 11.0% | 9.9% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 1.15 | 1.22 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.7% | 12.4% |
Tax rate | 27.8% | 41.7% |
Debt/Equity ratio | 0.17 | 0.17 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 8.8% | 11.0% |
Selected WACC | 9.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
600151.SS | Shanghai Aerospace Automobile Electromechanical Co Ltd | 0.17 | 1.78 | 1.62 |
000700.SZ | Jiangnan Mould & Plastic Technology Co Ltd | 0.35 | 1.39 | 1.14 |
000901.SZ | Aerospace Hi-Tech Holding Group Co Ltd | 0.18 | 1.37 | 1.23 |
001696.SZ | Chongqing Zongshen Power Machinery Co Ltd | 0.12 | 1.34 | 1.25 |
002126.SZ | Zhejiang Yinlun Machinery Co Ltd | 0.32 | 1.03 | 0.86 |
002537.SZ | HyUnion Holding Co Ltd | 0.17 | 1.06 | 0.96 |
600081.SS | Dongfeng Electronic Technology Co Ltd | 0.14 | 1.32 | 1.21 |
600676.SS | Shanghai Jiao Yun Group Co Ltd | 0.19 | 1.33 | 1.19 |
603013.SS | YAPP Automotive Systems Co Ltd | 0.02 | 1.06 | 1.05 |
603730.SS | Shanghai Daimay Automotive Interior Co Ltd | 0.12 | 0.89 | 0.83 |
Low | High | |
Unlevered beta | 1.11 | 1.2 |
Relevered beta | 1.22 | 1.33 |
Adjusted relevered beta | 1.15 | 1.22 |
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 600151.SS:
cost_of_equity (11.05%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.15) + 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.