601377.SS WACC - Weighted Average Cost of Capital

The WACC of China Industrial Securities Co Ltd (601377.SS) is 6.9%.

The Cost of Equity of China Industrial Securities Co Ltd (601377.SS) is 13.60%.

The Cost of Debt of China Industrial Securities Co Ltd (601377.SS) is 5.00%.

	Range	Selected
Cost of equity	11.90% - 15.30%	13.60%
Tax rate	14.90% - 20.50%	17.70%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.5% - 7.2%	6.9%

WACC

601377.SS WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.5	1.63

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.90%	15.30%

Tax rate	14.90%	20.50%
Debt/Equity ratio	2.45	2.45
Cost of debt	5.00%	5.00%

After-tax WACC	6.5%	7.2%


Selected WACC	6.9%

601377.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 601377.SS:

cost_of_equity (13.60%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.5) + 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.