603118.SS WACC - Weighted Average Cost of Capital
The WACC of Shenzhen Gongjin Electronics Co Ltd (603118.SS) is 9.8%.
| Range | Selected | |
| Cost of equity | 9.3% - 13.5% | 11.4% |
| Tax rate | 6.4% - 8.4% | 7.4% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 8.2% - 11.4% | 9.8% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.08 | 1.38 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.3% | 13.5% |
| Tax rate | 6.4% | 8.4% |
| Debt/Equity ratio | 0.32 | 0.32 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 8.2% | 11.4% |
| Selected WACC | 9.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 603118.SS | Shenzhen Gongjin Electronics Co Ltd | 0.32 | 0.91 | 0.7 |
| 000070.SZ | Shenzhen SDG Information Co Ltd | 0.48 | 1.01 | 0.7 |
| 000810.SZ | Skyworth Digital Co Ltd | 0.1 | 1.78 | 1.63 |
| 002396.SZ | Fujian Star-net Communication Co Ltd | 0.27 | 1.2 | 0.96 |
| 002544.SZ | Gci Science & Technology Co Ltd | 0.13 | 1.4 | 1.25 |
| 002583.SZ | Hytera Communications Corp Ltd | 0.11 | 1.66 | 1.5 |
| 1300.HK | Trigiant Group Ltd | 2.95 | 0.42 | 0.11 |
| 600775.SS | Nanjing Panda Electronics Co Ltd | 0.03 | 1.26 | 1.23 |
| 600990.SS | Sun Create Electronics Co Ltd | 0.32 | 1.55 | 1.2 |
| 601869.SS | Yangtze Optical Fibre and Cable Joint Stock Ltd Co | 0.57 | 1.1 | 0.72 |
| Low | High | |
| Unlevered beta | 0.86 | 1.21 |
| Relevered beta | 1.12 | 1.57 |
| Adjusted relevered beta | 1.08 | 1.38 |
603118.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 603118.SS:
cost_of_equity (11.40%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.08) + 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.