600873.SS WACC - Weighted Average Cost of Capital
The WACC of MeiHua Holdings Group Co Ltd (600873.SS) is 7.9%.
| Range | Selected | |
| Cost of equity | 7.6% - 9.5% | 8.55% |
| Tax rate | 14.6% - 15.1% | 14.85% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.1% - 8.7% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.8 | 0.82 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.6% | 9.5% |
| Tax rate | 14.6% | 15.1% |
| Debt/Equity ratio | 0.17 | 0.17 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.1% | 8.7% |
| Selected WACC | 7.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 600873.SS | MeiHua Holdings Group Co Ltd | 0.17 | 0.86 | 0.75 |
| 000019.SZ | Shenzhen Cereals Holdings Co Ltd | 0.19 | 0.75 | 0.65 |
| 002299.SZ | Fujian Sunner Development Co Ltd | 0.39 | 1.24 | 0.93 |
| 002567.SZ | Tangrenshen Group Co Ltd | 1.09 | 1.21 | 0.63 |
| 002726.SZ | Shandong Longda Meat Foodstuff Co Ltd | 0.51 | 0.89 | 0.62 |
| 1068.HK | China Yurun Food Group Ltd | 1.69 | 1.38 | 0.56 |
| 1717.HK | Ausnutria Dairy Corp Ltd | 0.71 | 0.74 | 0.46 |
| 3999.HK | Dachan Food (Asia) Ltd | 0.98 | 0.12 | 0.06 |
| 600429.SS | Beijing Sanyuan Foods Co Ltd | 0.33 | 1.08 | 0.84 |
| 600737.SS | COFCO Sugar Holding Co Ltd | 0.23 | 0.71 | 0.59 |
| Low | High | |
| Unlevered beta | 0.61 | 0.63 |
| Relevered beta | 0.7 | 0.73 |
| Adjusted relevered beta | 0.8 | 0.82 |
600873.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 600873.SS:
cost_of_equity (8.55%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.8) + 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.