The WACC of ChangYuan Technology Group Ltd (600525.SS) is 6.6%.
Range | Selected | |
Cost of equity | 7.3% - 11.4% | 9.35% |
Tax rate | 7.9% - 14.2% | 11.05% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.8% - 7.4% | 6.6% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.75 | 1.08 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.3% | 11.4% |
Tax rate | 7.9% | 14.2% |
Debt/Equity ratio | 1.26 | 1.26 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.8% | 7.4% |
Selected WACC | 6.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
600525.SS | ChangYuan Technology Group Ltd | 1.26 | 0.51 | 0.24 |
002300.SZ | Fujian Nanping Sun Cable Co Ltd | 0.54 | 1.12 | 0.75 |
002533.SZ | Gold Cup Electric Apparatus Co Ltd | 0.55 | 0.99 | 0.66 |
002733.SZ | Shenzhen Center Power Tech Co Ltd | 0.21 | 0.58 | 0.49 |
1399.HK | Veson Holdings Ltd | 6.59 | 0.29 | 0.04 |
505.HK | Xingye Alloy Materials Group Ltd | 1.66 | 0.07 | 0.03 |
600261.SS | Zhejiang Yankon Group Co Ltd | 0.14 | 1.05 | 0.94 |
601567.SS | Ningbo Sanxing Medical Electric Co Ltd | 0.18 | 0.27 | 0.23 |
603618.SS | Hangzhou Cable Co Ltd | 1.33 | 1.29 | 0.59 |
605222.SS | Shanghai QiFan Cable Co Ltd | 1.14 | 0.67 | 0.33 |
Low | High | |
Unlevered beta | 0.3 | 0.53 |
Relevered beta | 0.63 | 1.12 |
Adjusted relevered beta | 0.75 | 1.08 |
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 600525.SS:
cost_of_equity (9.35%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.75) + 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.