603500.SS WACC - Weighted Average Cost of Capital
The WACC of Zhejiang Tiantai Xianghe Industrial Co Ltd (603500.SS) is 10.2%.
| Range | Selected | |
| Cost of equity | 9.4% - 12.0% | 10.7% |
| Tax rate | 12.5% - 12.9% | 12.7% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 9.0% - 11.4% | 10.2% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.09 | 1.17 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.4% | 12.0% |
| Tax rate | 12.5% | 12.9% |
| Debt/Equity ratio | 0.09 | 0.09 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 9.0% | 11.4% |
| Selected WACC | 10.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 603500.SS | Zhejiang Tiantai Xianghe Industrial Co Ltd | 0.09 | 1.22 | 1.13 |
| 002691.SZ | Jikai Equipment Manufacturing Co Ltd | 0.04 | 1.48 | 1.43 |
| 1301.HK | D&G Technology Holding Co Ltd | 0 | 0.31 | 0.31 |
| 300103.SZ | Dagang Holding Group Co Ltd | 0.07 | 1.1 | 1.04 |
| 300210.SZ | Anshan Senyuan Road & Bridge Co Ltd | 0.07 | 1.81 | 1.71 |
| 300589.SZ | Jianglong Shipbuilding Co Ltd | 0.08 | 1.13 | 1.06 |
| 300818.SZ | Jiangxi Naipu Mining Machinery and New Materials Co Ltd | 0.17 | 1.16 | 1.01 |
| 300837.SZ | Zhejiang ZheKuang Heavy Industry Co Ltd | 0.17 | 1.38 | 1.2 |
| 300865.SZ | Chengdu Dahongli Machinery Co Ltd | 0.01 | 1.68 | 1.66 |
| 300923.SZ | Yeal Electric Co Ltd | 0.01 | 1.06 | 1.05 |
| Low | High | |
| Unlevered beta | 1.05 | 1.16 |
| Relevered beta | 1.13 | 1.25 |
| Adjusted relevered beta | 1.09 | 1.17 |
603500.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 603500.SS:
cost_of_equity (10.70%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.09) + 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.