600738.SS WACC - Weighted Average Cost of Capital
The WACC of Lanzhou Lishang Guochao Industrial Group Co Ltd (600738.SS) is 6.8%.
| Range | Selected | |
| Cost of equity | 5.3% - 9.4% | 7.35% |
| Tax rate | 35.5% - 40.3% | 37.9% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.0% - 8.5% | 6.8% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.43 | 0.8 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.3% | 9.4% |
| Tax rate | 35.5% | 40.3% |
| Debt/Equity ratio | 0.15 | 0.15 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.0% | 8.5% |
| Selected WACC | 6.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 600738.SS | Lanzhou Lishang Guochao Industrial Group Co Ltd | 0.15 | 1.08 | 0.98 |
| 2735.T | Watts Co Ltd | 0.36 | -0.01 | 0 |
| 3080.T | Jason Co Ltd | 0.11 | 0.12 | 0.11 |
| 600306.SS | Shenyang Commercial City Co Ltd | 1.47 | -0.98 | -0.51 |
| 600628.SS | Shanghai New World Co Ltd | 0.12 | 1.01 | 0.94 |
| 600693.SS | Fujian Dongbai Group Co Ltd | 1.45 | 0.01 | 0.01 |
| 600774.SS | Wuhan Hanshang Group Co Ltd | 0.36 | 1.24 | 1.01 |
| 600838.SS | Shanghai Join Buy Co Ltd | 0 | 1.07 | 1.07 |
| 600858.SS | Inzone Group Co Ltd | 1.92 | 0.96 | 0.44 |
| TRS.AX | Reject Shop Ltd | 0.95 | 0.24 | 0.15 |
| Low | High | |
| Unlevered beta | 0.13 | 0.64 |
| Relevered beta | 0.15 | 0.7 |
| Adjusted relevered beta | 0.43 | 0.8 |
600738.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 600738.SS:
cost_of_equity (7.35%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.43) + 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.