The WACC of Hailir Pesticides and Chemicals Group Co Ltd (603639.SS) is 8.1%.
Range | Selected | |
Cost of equity | 8.5% - 10.7% | 9.6% |
Tax rate | 12.3% - 14.4% | 13.35% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.4% - 8.9% | 8.1% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.95 | 0.98 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.5% | 10.7% |
Tax rate | 12.3% | 14.4% |
Debt/Equity ratio | 0.39 | 0.39 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.4% | 8.9% |
Selected WACC | 8.1% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
603639.SS | Hailir Pesticides and Chemicals Group Co Ltd | 0.39 | 0.96 | 0.71 |
000713.SZ | Hefei Fengle Seed Co Ltd | 0.09 | 0.88 | 0.81 |
002109.SZ | Shaanxi Xinghua Chemistry Co Ltd | 0.94 | 1.34 | 0.74 |
002170.SZ | Shenzhen Batian Ecotypic Engineering Co Ltd | 0.22 | 0.83 | 0.69 |
002538.SZ | Anhui Sierte Fertilizer Industry Ltd Co | 0.01 | 0.86 | 0.85 |
002734.SZ | Limin Group Co Ltd | 0.32 | 0.67 | 0.52 |
002895.SZ | Guizhou Chanhen Chemical Corp | 0.29 | 0.87 | 0.69 |
600227.SS | Guizhou Salvage Pharmaceutical Co Ltd | 0.37 | 0.77 | 0.58 |
600230.SS | Cangzhou Dahua Co Ltd | 0.21 | 0.99 | 0.84 |
600731.SS | Hunan Haili Chemical Industry Co Ltd | 0.17 | 0.74 | 0.65 |
Low | High | |
Unlevered beta | 0.69 | 0.72 |
Relevered beta | 0.93 | 0.97 |
Adjusted relevered beta | 0.95 | 0.98 |
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 603639.SS:
cost_of_equity (9.60%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.95) + 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.