The WACC of Hebei Yangyuan ZhiHui Beverage Co Ltd (603156.SS) is 9.5%.
Range | Selected | |
Cost of equity | 8.4% - 11.1% | 9.75% |
Tax rate | 23.3% - 24.3% | 23.8% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 8.2% - 10.7% | 9.5% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.93 | 1.04 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.4% | 11.1% |
Tax rate | 23.3% | 24.3% |
Debt/Equity ratio | 0.05 | 0.05 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 8.2% | 10.7% |
Selected WACC | 9.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
603156.SS | Hebei Yangyuan ZhiHui Beverage Co Ltd | 0.05 | 0.85 | 0.82 |
002216.SZ | Sanquan Food Co Ltd | 0.08 | 1.47 | 1.38 |
002507.SZ | Chongqing Fuling Zhacai Group Co Ltd | 0 | 1.15 | 1.15 |
002557.SZ | Chacha Food Co Ltd | 0.24 | 1.06 | 0.9 |
002946.SZ | New Hope Dairy Co Ltd | 0.2 | 0.75 | 0.65 |
1458.HK | Zhou Hei Ya International Holdings Company Ltd | 0.08 | 0.98 | 0.93 |
1717.HK | Ausnutria Dairy Corp Ltd | 0.67 | 0.76 | 0.5 |
600298.SS | Angel Yeast Co Ltd | 0.22 | 0.44 | 0.38 |
600872.SS | Jonjee Hi-tech Industrial and Commercial Holding Co Ltd | 0.05 | 1.54 | 1.49 |
603866.SS | Toly Bread Co Ltd | 0.14 | 1.41 | 1.28 |
Low | High | |
Unlevered beta | 0.87 | 1.02 |
Relevered beta | 0.9 | 1.06 |
Adjusted relevered beta | 0.93 | 1.04 |
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 603156.SS:
cost_of_equity (9.75%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.93) + 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.