The WACC of Shaanxi Construction Machinery Co Ltd (600984.SS) is 7.7%.
Range | Selected | |
Cost of equity | 12.9% - 18.0% | 15.45% |
Tax rate | 14.7% - 15.6% | 15.15% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.9% - 8.4% | 7.7% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 1.66 | 2.01 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 12.9% | 18.0% |
Tax rate | 14.7% | 15.6% |
Debt/Equity ratio | 2.28 | 2.28 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.9% | 8.4% |
Selected WACC | 7.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
600984.SS | Shaanxi Construction Machinery Co Ltd | 2.28 | 1.59 | 0.54 |
000880.SZ | Weichai Heavy Machinery Co Ltd | 0.11 | 0.88 | 0.8 |
002111.SZ | Weihai Guangtai Airport Equipment Co Ltd | 0.37 | 1.3 | 0.99 |
002283.SZ | Tianrun Industry Technology Co Ltd | 0.17 | 1.27 | 1.11 |
002434.SZ | Zhejiang Wanliyang Co Ltd | 0.27 | 1.31 | 1.06 |
002480.SZ | Chengdu Xinzhu Road&Bridge Machinery Co Ltd | 1.84 | 0.46 | 0.18 |
1596.HK | Hebei Yichen Industrial Group Corp Ltd | 0.36 | -0.12 | -0.09 |
300527.SZ | China Harzone Industry Corp Ltd | 0.03 | 0.96 | 0.93 |
600495.SS | Jinxi Axle Co Ltd | 0.05 | 0.65 | 0.62 |
603680.SS | KTK GROUP Co Ltd | 0.22 | 0.85 | 0.71 |
Low | High | |
Unlevered beta | 0.68 | 0.86 |
Relevered beta | 1.99 | 2.51 |
Adjusted relevered beta | 1.66 | 2.01 |
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 600984.SS:
cost_of_equity (15.45%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.66) + 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.