600781.SS WACC - Weighted Average Cost of Capital
The WACC of FUREN Group Pharmaceutical Co Ltd (600781.SS) is 6.3%.
| Range | Selected | |
| Cost of equity | 12.7% - 32.3% | 22.5% |
| Tax rate | 4.9% - 11.4% | 8.15% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.5% - 7.1% | 6.3% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.64 | 4.02 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.7% | 32.3% |
| Tax rate | 4.9% | 11.4% |
| Debt/Equity ratio | 9.43 | 9.43 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.5% | 7.1% |
| Selected WACC | 6.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 600781.SS | FUREN Group Pharmaceutical Co Ltd | 9.43 | 0.6 | 0.06 |
| 000756.SZ | Shandong Xinhua Pharmaceutical Co Ltd | 0.23 | 1.02 | 0.84 |
| 002433.SZ | Guangdong Taiantang Pharmaceutical Co Ltd | 5.26 | 0.25 | 0.04 |
| 002435.SZ | ChangjiangRunfa Health Industry Co Ltd | 8.88 | 1.65 | 0.18 |
| 002437.SZ | Harbin Gloria Pharmaceuticals Co Ltd | 0 | 1.31 | 1.31 |
| 1558.HK | YiChang HEC ChangJiang Pharmaceutical Co Ltd | 0.16 | 0.24 | 0.21 |
| 1666.HK | Tong Ren Tang Technologies Co Ltd | 0.39 | 0.8 | 0.59 |
| 2877.HK | China Shineway Pharmaceutical Group Ltd | 0.05 | 0.57 | 0.54 |
| 300158.SZ | Shanxi Zhendong Pharmaceutical Co Ltd | 0.03 | 1.55 | 1.51 |
| 503.HK | Lansen Pharmaceutical Holdings Ltd | 0.2 | 0.21 | 0.18 |
| Low | High | |
| Unlevered beta | 0.2 | 0.56 |
| Relevered beta | 1.96 | 5.51 |
| Adjusted relevered beta | 1.64 | 4.02 |
600781.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 600781.SS:
cost_of_equity (22.50%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.64) + 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.