The WACC of Haier Smart Home Co Ltd (600690.SS) is 7.7%.
Range | Selected | |
Cost of equity | 6.9% - 10.2% | 8.55% |
Tax rate | 16.1% - 16.7% | 16.4% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.4% - 9.0% | 7.7% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.7 | 0.91 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.9% | 10.2% |
Tax rate | 16.1% | 16.7% |
Debt/Equity ratio | 0.25 | 0.25 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.4% | 9.0% |
Selected WACC | 7.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
600690.SS | Haier Smart Home Co Ltd | 0.25 | 0.56 | 0.46 |
000333.SZ | Midea Group Co Ltd | 0.2 | 0.46 | 0.39 |
000521.SZ | Changhong Meiling Co Ltd | 1.22 | 0.88 | 0.44 |
000651.SZ | Gree Electric Appliances Inc of Zhuhai | 0.34 | 0.48 | 0.37 |
000921.SZ | Hisense Home Appliances Group Co Ltd | 0.62 | 1.07 | 0.71 |
002032.SZ | Zhejiang Supor Co Ltd | 0.04 | 0.24 | 0.23 |
002242.SZ | Joyoung Co Ltd | 0.26 | 1.35 | 1.11 |
002508.SZ | Hangzhou Robam Appliances Co Ltd | 0.06 | 0.94 | 0.9 |
002705.SZ | Guangdong Xinbao Electrical Appliances Holdings Co Ltd | 0.34 | 0.94 | 0.73 |
603486.SS | Ecovacs Robotics Co Ltd | 0.07 | 1.34 | 1.27 |
Low | High | |
Unlevered beta | 0.45 | 0.72 |
Relevered beta | 0.55 | 0.87 |
Adjusted relevered beta | 0.7 | 0.91 |
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 600690.SS:
cost_of_equity (8.55%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.7) + 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.