The WACC of Zhejiang Hangmin Co Ltd (600987.SS) is 8.7%.
Range | Selected | |
Cost of equity | 8.5% - 11.7% | 10.1% |
Tax rate | 12.9% - 13.6% | 13.25% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.5% - 9.9% | 8.7% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.95 | 1.13 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.5% | 11.7% |
Tax rate | 12.9% | 13.6% |
Debt/Equity ratio | 0.33 | 0.33 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.5% | 9.9% |
Selected WACC | 8.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
600987.SS | Zhejiang Hangmin Co Ltd | 0.33 | 0.56 | 0.43 |
000726.SZ | Lu Thai Textile Co Ltd | 0.55 | 1.03 | 0.7 |
000936.SZ | Jiangsu Huaxicun Co Ltd | 0.18 | 1.63 | 1.41 |
002083.SZ | Sunvim Group Co Ltd | 0.51 | 1.06 | 0.73 |
002087.SZ | Henan Xinye Textile Co Ltd | 34.11 | 1.3 | 0.04 |
002293.SZ | Luolai Lifestyle Technology Co Ltd | 0.11 | 0.86 | 0.78 |
002427.SZ | Zhejiang Unifull Industrial Fibre Co Ltd | 0.11 | 1.26 | 1.15 |
300218.SZ | Anhui Anli Material Technology Co Ltd | 0.12 | 1.33 | 1.2 |
300918.SZ | Shandong Nanshan Zhishang Sci-Tech Co Ltd | 0.18 | 1.52 | 1.32 |
601339.SS | Bros Eastern Co Ltd | 0.54 | 0.75 | 0.51 |
Low | High | |
Unlevered beta | 0.72 | 0.93 |
Relevered beta | 0.93 | 1.19 |
Adjusted relevered beta | 0.95 | 1.13 |
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 600987.SS:
cost_of_equity (10.10%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.95) + 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.