601038.SS WACC - Weighted Average Cost of Capital
The WACC of First Tractor Co Ltd (601038.SS) is 8.8%.
| Range | Selected | |
| Cost of equity | 8.5% - 10.8% | 9.65% |
| Tax rate | 5.5% - 6.9% | 6.2% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.8% - 9.8% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.94 | 1.01 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.5% | 10.8% |
| Tax rate | 5.5% | 6.9% |
| Debt/Equity ratio | 0.21 | 0.21 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.8% | 9.8% |
| Selected WACC | 8.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 601038.SS | First Tractor Co Ltd | 0.21 | 0.59 | 0.49 |
| 000519.SZ | North Industries Group Red Arrow Co Ltd | 0.09 | 1.05 | 0.97 |
| 000903.SZ | Kunming Yunnei Power Co Ltd | 0.74 | 1.26 | 0.74 |
| 002434.SZ | Zhejiang Wanliyang Co Ltd | 0.27 | 1.35 | 1.08 |
| 002890.SZ | Shandong Hongyu Agricultural Machinery Co Ltd | 0.02 | 0.93 | 0.91 |
| 300159.SZ | Xinjiang Machinery Research Institute Co Ltd | 0.64 | 1.52 | 0.95 |
| 600169.SS | Taiyuan Heavy Industry Co Ltd | 2.17 | 1.31 | 0.43 |
| 600894.SS | Guangzhou Guangri Stock Co Ltd | 0.13 | 0.89 | 0.8 |
| 603789.SS | Thinker Agricultural Machinery Co Ltd | 0.19 | 0.92 | 0.78 |
| 840.HK | Xinjiang Tianye Water Saving Irrigation System Co Ltd | 1.7 | 0.47 | 0.18 |
| Low | High | |
| Unlevered beta | 0.76 | 0.84 |
| Relevered beta | 0.91 | 1.01 |
| Adjusted relevered beta | 0.94 | 1.01 |
601038.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 601038.SS:
cost_of_equity (9.65%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.94) + 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.