The WACC of Beijing Urban Construction Investment & Development Co Ltd (600266.SS) is 4.5%.
Range | Selected | |
Cost of equity | 9.1% - 12.4% | 10.75% |
Tax rate | 31.5% - 37.8% | 34.65% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 4.4% - 4.7% | 4.5% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 1.04 | 1.22 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.1% | 12.4% |
Tax rate | 31.5% | 37.8% |
Debt/Equity ratio | 5.01 | 5.01 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 4.4% | 4.7% |
Selected WACC | 4.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
600266.SS | Beijing Urban Construction Investment & Development Co Ltd | 5.01 | 1.33 | 0.31 |
000736.SZ | CCCG Real Estate Corp Ltd | 11.26 | 1.38 | 0.17 |
1107.HK | Modern Land (China) Co Ltd | 413.26 | 0.21 | 0 |
1862.HK | Jingrui Holdings Ltd | 1134.22 | 0.27 | 0 |
600094.SS | Greattown Holdings Ltd | 0.43 | 1.19 | 0.93 |
600565.SS | DIMA HOLDINGS Co Ltd | 10.55 | 1.51 | 0.19 |
600657.SS | Cinda Real Estate Co Ltd | 3.5 | 1.75 | 0.53 |
600675.SS | China Enterprise Co Ltd | 1.42 | 1.27 | 0.66 |
600708.SS | Bright Real Estate Group Co Ltd | 4.85 | 1.2 | 0.29 |
601588.SS | Beijing North Star Co Ltd | 4.3 | 1.19 | 0.31 |
Low | High | |
Unlevered beta | 0.25 | 0.31 |
Relevered beta | 1.06 | 1.33 |
Adjusted relevered beta | 1.04 | 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 600266.SS:
cost_of_equity (10.75%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.04) + 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.