603197.SS WACC - Weighted Average Cost of Capital
The WACC of Shanghai Baolong Automotive Corp (603197.SS) is 9.8%.
| Range | Selected | |
| Cost of equity | 11.5% - 15.0% | 13.25% |
| Tax rate | 22.8% - 23.8% | 23.3% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 8.7% - 10.9% | 9.8% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.43 | 1.59 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.5% | 15.0% |
| Tax rate | 22.8% | 23.8% |
| Debt/Equity ratio | 0.58 | 0.58 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 8.7% | 10.9% |
| Selected WACC | 9.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 603197.SS | Shanghai Baolong Automotive Corp | 0.58 | 1.26 | 0.87 |
| 002284.SZ | Zhejiang Asia-Pacific Mechanical & Electronic Co Ltd | 0.25 | 1.46 | 1.23 |
| 002328.SZ | Shanghai Xinpeng Industry Co Ltd | 0.16 | 1.12 | 1 |
| 002454.SZ | Songz Automobile Air Conditioning Co Ltd | 0.31 | 1.22 | 0.99 |
| 002472.SZ | Zhejiang Shuanghuan Driveline Co Ltd | 0.12 | 1.55 | 1.42 |
| 002510.SZ | Tianjin Motor Dies Co Ltd | 0.26 | 1.53 | 1.27 |
| 002590.SZ | Zhejiang VIE Science & Technology Co Ltd | 0.14 | 1.68 | 1.52 |
| 002662.SZ | Beijing WKW Automotive Parts Co Ltd | 0.1 | 1.46 | 1.35 |
| 002664.SZ | Changying Xinzhi Technology Co Ltd | 0.62 | 1.39 | 0.94 |
| 600523.SS | Guizhou Guihang Automotive Components Co Ltd | 0.03 | 1.47 | 1.44 |
| Low | High | |
| Unlevered beta | 1.14 | 1.3 |
| Relevered beta | 1.64 | 1.88 |
| Adjusted relevered beta | 1.43 | 1.59 |
603197.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 603197.SS:
cost_of_equity (13.25%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.43) + 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.