600726.SS WACC - Weighted Average Cost of Capital
The WACC of Huadian Energy Co Ltd (600726.SS) is 6.5%.
| Range | Selected | |
| Cost of equity | 7.6% - 10.0% | 8.8% |
| Tax rate | 25.0% - 25.0% | 25% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.9% - 7.2% | 6.5% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.81 | 0.88 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.6% | 10.0% |
| Tax rate | 25.0% | 25.0% |
| Debt/Equity ratio | 0.81 | 0.81 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.9% | 7.2% |
| Selected WACC | 6.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 600726.SS | Huadian Energy Co Ltd | 0.81 | 1.01 | 0.63 |
| 000600.SZ | Jointo Energy Investment Co Ltd Hebei | 1.98 | 1.35 | 0.54 |
| 000690.SZ | Guangdong Baolihua New Energy Stock Co Ltd | 0.78 | 1.1 | 0.69 |
| 000767.SZ | Jinneng Holding Shanxi Electric Power Co Ltd | 3.78 | 1.23 | 0.32 |
| 000875.SZ | Jilin Electric Power Co Ltd | 2.6 | 1.01 | 0.34 |
| 000966.SZ | Guodian Changyuan Electric Power Co Ltd | 1.3 | 0.92 | 0.46 |
| 600483.SS | Fujian Funeng Co Ltd | 0.66 | 0.62 | 0.42 |
| 600744.SS | Datang HuaYin Electric Power Co Ltd | 2.33 | 1.05 | 0.38 |
| 600780.SS | Top Energy Company Ltd Shanxi | 0.07 | 1.23 | 1.17 |
| 600863.SS | Inner Mongolia MengDian HuaNeng Thermal Power Corp Ltd | 0.46 | 0.66 | 0.49 |
| Low | High | |
| Unlevered beta | 0.45 | 0.51 |
| Relevered beta | 0.72 | 0.82 |
| Adjusted relevered beta | 0.81 | 0.88 |
600726.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 600726.SS:
cost_of_equity (8.80%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.81) + 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.