603630.SS WACC - Weighted Average Cost of Capital
The WACC of Lafang China Co Ltd (603630.SS) is 10.1%.
| Range | Selected | |
| Cost of equity | 8.5% - 11.6% | 10.05% |
| Tax rate | 8.0% - 8.6% | 8.3% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 8.5% - 11.6% | 10.1% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.96 | 1.11 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.5% | 11.6% |
| Tax rate | 8.0% | 8.6% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 8.5% | 11.6% |
| Selected WACC | 10.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 603630.SS | Lafang China Co Ltd | 0 | 1.17 | 1.17 |
| 000523.SZ | Lonkey Industrial Co Ltd Guangzhou | 0.16 | 1.62 | 1.42 |
| 000737.SZ | Nafine Chemical Industry Group Co Ltd | 0.52 | 1.18 | 0.8 |
| 002511.SZ | C&S Paper Co Ltd | 0.2 | 1.38 | 1.16 |
| 2222.HK | NVC International Holdings Ltd | 0.02 | 0.74 | 0.73 |
| 600651.SS | Shanghai Feilo Acoustics Co Ltd | 0.1 | 1.48 | 1.36 |
| 603515.SS | Opple Lighting Co Ltd | 0.01 | 1.38 | 1.37 |
| 6993.HK | Blue Moon Group Holdings Ltd | 0.01 | 0.59 | 0.58 |
| 7818.T | Transaction Co Ltd | 0.01 | -0.1 | -0.1 |
| JYOTHYLAB.NS | Jyothy Labs Ltd | 0 | 0.99 | 0.99 |
| Low | High | |
| Unlevered beta | 0.91 | 1.17 |
| Relevered beta | 0.94 | 1.16 |
| Adjusted relevered beta | 0.96 | 1.11 |
603630.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 603630.SS:
cost_of_equity (10.05%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.96) + 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.