600285.SS WACC - Weighted Average Cost of Capital

The WACC of Henan Lingrui Pharmaceutical Co Ltd (600285.SS) is 10.2%.

The Cost of Equity of Henan Lingrui Pharmaceutical Co Ltd (600285.SS) is 10.25%.

The Cost of Debt of Henan Lingrui Pharmaceutical Co Ltd (600285.SS) is 5.00%.

	Range	Selected
Cost of equity	9.10% - 11.40%	10.25%
Tax rate	11.80% - 12.50%	12.15%
Cost of debt	5.00% - 5.00%	5.00%
WACC	9.1% - 11.3%	10.2%

WACC

600285.SS WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.06	1.09

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.10%	11.40%

Tax rate	11.80%	12.50%
Debt/Equity ratio	0.02	0.02
Cost of debt	5.00%	5.00%

After-tax WACC	9.1%	11.3%


Selected WACC	10.2%

600285.SS's CAPM model and how its cost of Equity is calculated

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 600285.SS:

cost_of_equity (10.25%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.06) + 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.