The WACC of Hunan Oil Pump Co Ltd (603319.SS) is 10.7%.
Range | Selected | |
Cost of equity | 10.0% - 13.1% | 11.55% |
Tax rate | 9.3% - 10.4% | 9.85% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 9.3% - 12.0% | 10.7% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 1.19 | 1.32 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 10.0% | 13.1% |
Tax rate | 9.3% | 10.4% |
Debt/Equity ratio | 0.14 | 0.14 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 9.3% | 12.0% |
Selected WACC | 10.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
603319.SS | Hunan Oil Pump Co Ltd | 0.14 | 1.14 | 1.01 |
002224.SZ | Sanlux Co Ltd | 0.02 | 0.79 | 0.77 |
300095.SZ | Jiangxi Huawu Brake Co Ltd | 0.24 | 1.55 | 1.27 |
300193.SZ | Shenzhen Jasic Technology Co Ltd | 0.07 | 1.3 | 1.22 |
300403.SZ | Hanyu Group Joint Stock Co Ltd | 0.03 | 1.55 | 1.52 |
300757.SZ | RoboTechnik Intelligent Technology Co Ltd | 0.04 | 1.99 | 1.91 |
600592.SS | Fujian Longxi Bearing Group Co Ltd | 0.05 | 1.06 | 1.01 |
603757.SS | Zhejiang Dayuan Pumps Industry Co Ltd | 0.15 | 0.89 | 0.79 |
688518.SS | Shenzhen United Winners Laser Co Ltd | 0.15 | 1.62 | 1.43 |
688559.SS | Shenzhen Hymson Laser Intelligent Equipments Co Ltd | 0.54 | 2.06 | 1.38 |
Low | High | |
Unlevered beta | 1.14 | 1.32 |
Relevered beta | 1.28 | 1.48 |
Adjusted relevered beta | 1.19 | 1.32 |
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 603319.SS:
cost_of_equity (11.55%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.19) + 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.