601003.SS WACC - Weighted Average Cost of Capital
The WACC of Liuzhou Iron & Steel Co Ltd (601003.SS) is 5.9%.
| Range | Selected | |
| Cost of equity | 9.4% - 12.1% | 10.75% |
| Tax rate | 4.5% - 9.0% | 6.75% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.7% - 6.1% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.1 | 1.19 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.4% | 12.1% |
| Tax rate | 4.5% | 9.0% |
| Debt/Equity ratio | 3.75 | 3.75 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.7% | 6.1% |
| Selected WACC | 5.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 601003.SS | Liuzhou Iron & Steel Co Ltd | 3.55 | 1.11 | 0.26 |
| 000761.SZ | Bengang Steel Plates Co Ltd | 1.55 | 1.74 | 0.71 |
| 002110.SZ | Sansteel Minguang Co Ltd Fujian | 2.76 | 1.53 | 0.43 |
| 1090.HK | Da Ming International Holdings Ltd | 9.77 | 0.33 | 0.03 |
| 1266.HK | Xiwang Special Steel Co Ltd | 205.84 | 0.97 | 0.01 |
| 600282.SS | Nanjing Iron & Steel Co Ltd | 1.03 | 0.76 | 0.39 |
| 600307.SS | Gansu Jiu Steel Group Hongxing Iron & Steel Co Ltd | 3.5 | 0.88 | 0.21 |
| 600569.SS | AnYang lron & Steel lnc | 2.73 | 1.17 | 0.33 |
| 600581.SS | Xinjiang Ba Yi Iron & Steel Co Ltd | 4 | 1.22 | 0.26 |
| 601686.SS | Tianjin You Fa Steel Pipe Group Stock Co Ltd | 2.03 | 0.75 | 0.26 |
| Low | High | |
| Unlevered beta | 0.26 | 0.29 |
| Relevered beta | 1.15 | 1.28 |
| Adjusted relevered beta | 1.1 | 1.19 |
601003.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 601003.SS:
cost_of_equity (10.75%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.1) + 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.