The WACC of Shandong Cynda Chemical Co Ltd (603086.SS) is 8.2%.
Range | Selected | |
Cost of equity | 8.1% - 10.6% | 9.35% |
Tax rate | 15.6% - 19.9% | 17.75% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.3% - 9.2% | 8.2% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.89 | 0.97 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.1% | 10.6% |
Tax rate | 15.6% | 19.9% |
Debt/Equity ratio | 0.27 | 0.27 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.3% | 9.2% |
Selected WACC | 8.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
603086.SS | Shandong Cynda Chemical Co Ltd | 0.27 | 0.77 | 0.63 |
002170.SZ | Shenzhen Batian Ecotypic Engineering Co Ltd | 0.22 | 0.83 | 0.7 |
002496.SZ | Jiangsu Huifeng Bio Agriculture Co Ltd | 0.15 | 1.46 | 1.3 |
002513.SZ | Jiangsu Lanfeng Bio-chemical Co Ltd | 0.73 | 1.87 | 1.17 |
002942.SZ | Zhejiang XinNong Chemical Co Ltd | 0.08 | 1.03 | 0.97 |
300575.SZ | Jiangsu Flag Chemical Industry Co Ltd | 0.51 | 1.11 | 0.78 |
600727.SS | Shan Dong Lubei Chemical Co Ltd | 0.9 | 1.11 | 0.64 |
600731.SS | Hunan Haili Chemical Industry Co Ltd | 0.17 | 0.74 | 0.65 |
603585.SS | Suli Co Ltd | 0.46 | 0.84 | 0.61 |
603810.SS | Jiangsu Fengshan Group Co Ltd | 0.3 | 0.96 | 0.77 |
Low | High | |
Unlevered beta | 0.68 | 0.78 |
Relevered beta | 0.84 | 0.96 |
Adjusted relevered beta | 0.89 | 0.97 |
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 603086.SS:
cost_of_equity (9.35%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.89) + 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.