601718.SS WACC - Weighted Average Cost of Capital
The WACC of Jihua Group Corp Ltd (601718.SS) is 7.9%.
| Range | Selected | |
| Cost of equity | 7.1% - 10.2% | 8.65% |
| Tax rate | 2.5% - 7.3% | 4.9% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.6% - 9.1% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.72 | 0.91 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.1% | 10.2% |
| Tax rate | 2.5% | 7.3% |
| Debt/Equity ratio | 0.24 | 0.24 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.6% | 9.1% |
| Selected WACC | 7.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 601718.SS | Jihua Group Corp Ltd | 0.24 | 1.03 | 0.83 |
| 000812.SZ | Shaanxi Jinye Science Technology and Education Group Co Ltd | 0.53 | 0.78 | 0.52 |
| 002301.SZ | Shenzhen Comix Group Co Ltd | 0.36 | 1.36 | 1.01 |
| 002341.SZ | Shenzhen Selen Science & Technology Co Ltd | 3.26 | 1.42 | 0.34 |
| 1008.HK | Brilliant Circle Holdings International Ltd | 0.46 | 0.12 | 0.08 |
| 2162.T | nms Holdings Corp | 1.88 | 1.12 | 0.4 |
| 2869.HK | Greentown Service Group Co Ltd | 0.07 | 1.07 | 1.01 |
| 300203.SZ | Focused Photonics Hangzhou Inc | 0.36 | 1.46 | 1.08 |
| 5VJ.SI | Halcyon Agri Corporation Ltd | 2.48 | 1.19 | 0.35 |
| 603081.SS | Zhejiang Dafeng Industrial Co Ltd | 0.67 | 1.02 | 0.62 |
| Low | High | |
| Unlevered beta | 0.47 | 0.71 |
| Relevered beta | 0.58 | 0.87 |
| Adjusted relevered beta | 0.72 | 0.91 |
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.