The WACC of China Industrial Securities Co Ltd (601377.SS) is 6.8%.
Range | Selected | |
Cost of equity | 11.8% - 15.3% | 13.55% |
Tax rate | 14.9% - 20.5% | 17.7% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.4% - 7.2% | 6.8% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 1.5 | 1.62 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 11.8% | 15.3% |
Tax rate | 14.9% | 20.5% |
Debt/Equity ratio | 2.49 | 2.49 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.4% | 7.2% |
Selected WACC | 6.8% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
601377.SS | China Industrial Securities Co Ltd | 2.49 | 1.39 | 0.46 |
000783.SZ | Changjiang Securities Co Ltd | 1.7 | 1.84 | 0.77 |
000987.SZ | Guangzhou Yuexiu Financial Holdings Group Co Ltd | 3.81 | 1.66 | 0.4 |
600061.SS | SDIC Capital Co Ltd | 2.43 | 1.56 | 0.52 |
600958.SS | Orient Securities Co Ltd | 2.27 | 1.34 | 0.47 |
601108.SS | Caitong Securities Co Ltd | 1.9 | 1.55 | 0.61 |
601788.SS | Everbright Securities Co Ltd | 1.57 | 1.44 | 0.63 |
601878.SS | Zheshang Securities Co Ltd | 1.11 | 1.46 | 0.77 |
601881.SS | China Galaxy Securities Co Ltd | 1.77 | 1.58 | 0.65 |
601901.SS | Founder Securities Co Ltd | 1.84 | 1.68 | 0.67 |
Low | High | |
Unlevered beta | 0.57 | 0.64 |
Relevered beta | 1.75 | 1.93 |
Adjusted relevered beta | 1.5 | 1.62 |
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 (13.55%) = 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.