601718.SS
Jihua Group Corp Ltd
Price:  
2.72 
CNY
Volume:  
25,748,900
China | Commercial Services & Supplies

601718.SS WACC - Weighted Average Cost of Capital

The WACC of Jihua Group Corp Ltd (601718.SS) is 7.9%.

The Cost of Equity of Jihua Group Corp Ltd (601718.SS) is 8.65%.
The Cost of Debt of Jihua Group Corp Ltd (601718.SS) is 5%.

RangeSelected
Cost of equity7.1% - 10.2%8.65%
Tax rate2.5% - 7.3%4.9%
Cost of debt5.0% - 5.0%5%
WACC6.6% - 9.1%7.9%
WACC

601718.SS WACC calculation

CategoryLowHigh
Long-term bond rate2.7%3.2%
Equity market risk premium6.1%7.1%
Adjusted beta0.720.91
Additional risk adjustments0.0%0.5%
Cost of equity7.1%10.2%
Tax rate2.5%7.3%
Debt/Equity ratio
0.240.24
Cost of debt5.0%5.0%
After-tax WACC6.6%9.1%
Selected WACC7.9%

601718.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 601718.SS:

cost_of_equity (8.65%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.72) + 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.