601226.SS WACC - Weighted Average Cost of Capital
The WACC of HuaDian Heavy Industries Co Ltd (601226.SS) is 8.4%.
| Range | Selected | |
| Cost of equity | 8.5% - 10.9% | 9.7% |
| Tax rate | 15.7% - 19.7% | 17.7% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.5% - 9.2% | 8.4% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.96 | 1.01 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.5% | 10.9% |
| Tax rate | 15.7% | 19.7% |
| Debt/Equity ratio | 0.32 | 0.32 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.5% | 9.2% |
| Selected WACC | 8.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 601226.SS | HuaDian Heavy Industries Co Ltd | 0.32 | 0.76 | 0.6 |
| 002047.SZ | Shen Zhen Bauing Construction Holding Group Co Ltd | 0.3 | 1.32 | 1.06 |
| 002116.SZ | China Haisum Engineering Co Ltd | 0.01 | 0.84 | 0.84 |
| 002941.SZ | Xinjiang Communications Construction Group Co Ltd | 0.99 | 1.12 | 0.62 |
| 600284.SS | Shanghai Pudong Road & Bridge Construction Co Ltd | 0.44 | 1.02 | 0.75 |
| 600326.SS | Tibet Tianlu Co Ltd | 0.41 | 1.12 | 0.84 |
| 600477.SS | Hang Xiao Steel Structure Co Ltd | 0.95 | 1.4 | 0.79 |
| 600510.SS | Black Peony Group Co Ltd | 2.34 | 1.62 | 0.55 |
| 600545.SS | Saurer Intelligent Technology Co Ltd | 0.64 | 1.72 | 1.13 |
| 600846.SS | Shanghai Tongji Science&Technology Industrial Co Ltd | 0.44 | 0.99 | 0.72 |
| Low | High | |
| Unlevered beta | 0.74 | 0.81 |
| Relevered beta | 0.94 | 1.01 |
| Adjusted relevered beta | 0.96 | 1.01 |
601226.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 601226.SS:
cost_of_equity (9.70%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.96) + 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.