601816.SS WACC - Weighted Average Cost of Capital
The WACC of Beijing-Shanghai High Speed Railway Co Ltd (601816.SS) is 7.7%.
| Range | Selected | |
| Cost of equity | 7.1% - 9.9% | 8.5% |
| Tax rate | 30.2% - 34.7% | 32.45% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.6% - 8.8% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.73 | 0.87 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.1% | 9.9% |
| Tax rate | 30.2% | 34.7% |
| Debt/Equity ratio | 0.19 | 0.19 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.6% | 8.8% |
| Selected WACC | 7.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 601816.SS | Beijing-Shanghai High Speed Railway Co Ltd | 0.19 | 0.6 | 0.53 |
| 000008.SZ | China High Speed Railway Technology Co Ltd | 0.54 | 1.35 | 0.99 |
| 000557.SZ | Ningxia Western Venture Industrial Co Ltd | 0 | 1.34 | 1.33 |
| 600125.SS | China Railway Tielong Container Logistics Co Ltd | 0.11 | 0.85 | 0.79 |
| 600834.SS | Shanghai Shentong Metro Co Ltd | 0.04 | 0.85 | 0.83 |
| 601006.SS | Daqin Railway Co Ltd | 0.15 | 0.57 | 0.51 |
| 601333.SS | Guangshen Railway Co Ltd | 0.12 | 0.72 | 0.67 |
| 66.HK | MTR Corp Ltd | 0.49 | 0.47 | 0.35 |
| 9007.T | Odakyu Electric Railway Co Ltd | 1 | 0.42 | 0.25 |
| 9042.T | Hankyu Hanshin Holdings Inc | 1.32 | 0.28 | 0.15 |
| Low | High | |
| Unlevered beta | 0.53 | 0.72 |
| Relevered beta | 0.6 | 0.81 |
| Adjusted relevered beta | 0.73 | 0.87 |
601816.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 601816.SS:
cost_of_equity (8.50%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.73) + 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.