603121.SS WACC - Weighted Average Cost of Capital
The WACC of Shanghai Sinotec Co Ltd (603121.SS) is 9.3%.
| Range | Selected | |
| Cost of equity | 8.4% - 10.9% | 9.65% |
| Tax rate | 18.8% - 20.1% | 19.45% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 8.2% - 10.5% | 9.3% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.94 | 1.01 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.4% | 10.9% |
| Tax rate | 18.8% | 20.1% |
| Debt/Equity ratio | 0.06 | 0.06 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 8.2% | 10.5% |
| Selected WACC | 9.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 603121.SS | Shanghai Sinotec Co Ltd | 0.06 | 1.19 | 1.13 |
| 002265.SZ | Yunnan Xiyi Industrial Co Ltd | 0.08 | 0.95 | 0.89 |
| 003033.SZ | Qingdao CHOHO Industrial Co Ltd | 0.14 | 0.84 | 0.75 |
| 300421.SZ | Jiangsu LiXing General Steel Ball Co Ltd | 0.07 | 1.35 | 1.28 |
| 300733.SZ | Chengdu Xiling Power Science & Technology Incorporated Co | 0.14 | 1.47 | 1.32 |
| 300742.SZ | Nanjing YueBoo Power System Co Ltd | 41.71 | 1.41 | 0.04 |
| 300893.SZ | Zhejiang Songyuan Automotive Safety Systems Co Ltd | 0.17 | 0.93 | 0.82 |
| 600698.SS | Hunan Tyen Machinery Co Ltd | 0 | 0.72 | 0.72 |
| 603040.SS | Hangzhou XZB Tech Co Ltd | 0.01 | 0.94 | 0.93 |
| 603922.SS | Suzhou Jin Hong Shun Auto Parts Co Ltd | 0.13 | 1.13 | 1.03 |
| Low | High | |
| Unlevered beta | 0.86 | 0.97 |
| Relevered beta | 0.91 | 1.01 |
| Adjusted relevered beta | 0.94 | 1.01 |
603121.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 603121.SS:
cost_of_equity (9.65%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.94) + 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.