600698.SS WACC - Weighted Average Cost of Capital
The WACC of Hunan Tyen Machinery Co Ltd (600698.SS) is 9.4%.
| Range | Selected | |
| Cost of equity | 8.0% - 10.9% | 9.45% |
| Tax rate | 11.1% - 23.4% | 17.25% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 8.0% - 10.8% | 9.4% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.87 | 1.01 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.0% | 10.9% |
| Tax rate | 11.1% | 23.4% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 8.0% | 10.8% |
| Selected WACC | 9.4% | |
| Low | High | |
| Unlevered beta | 0.8 | 1.01 |
| Relevered beta | 0.81 | 1.01 |
| Adjusted relevered beta | 0.87 | 1.01 |
600698.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 600698.SS:
cost_of_equity (9.45%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.87) + 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.