603650.SS WACC - Weighted Average Cost of Capital
The WACC of Red Avenue New Materials Group Co Ltd (603650.SS) is 9.6%.
| Range | Selected | |
| Cost of equity | 8.9% - 12.3% | 10.6% |
| Tax rate | 6.6% - 7.7% | 7.15% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 8.2% - 10.9% | 9.6% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.02 | 1.21 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.9% | 12.3% |
| Tax rate | 6.6% | 7.7% |
| Debt/Equity ratio | 0.21 | 0.21 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 8.2% | 10.9% |
| Selected WACC | 9.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 603650.SS | Red Avenue New Materials Group Co Ltd | 0.21 | 1.41 | 1.18 |
| 002145.SZ | CNNC Hua Yuan Titanium Dioxide Co Ltd | 0.36 | 1.34 | 1 |
| 002324.SZ | Shanghai Pret Composites Co Ltd | 0.43 | 1.45 | 1.04 |
| 002409.SZ | Jiangsu Yoke Technology Co Ltd | 0.14 | 1.33 | 1.18 |
| 002497.SZ | Sichuan Yahua Industrial Group Co Ltd | 0.12 | 1.39 | 1.25 |
| 300777.SZ | Sinofibers Technology Co Ltd | 0 | 1.55 | 1.55 |
| 600075.SS | Xinjiang Tianye Co Ltd | 0.98 | 0.96 | 0.5 |
| 600273.SS | Zhejiang Jiahua Energy Chemical Industry Co Ltd | 0.09 | 0.64 | 0.59 |
| 603010.SS | Zhejiang Wansheng Co Ltd | 0.31 | 0.8 | 0.62 |
| 603033.SS | Zhejiang Sanwei Rubber Item Co Ltd | 0.48 | 0.95 | 0.66 |
| Low | High | |
| Unlevered beta | 0.87 | 1.09 |
| Relevered beta | 1.03 | 1.31 |
| Adjusted relevered beta | 1.02 | 1.21 |
603650.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 603650.SS:
cost_of_equity (10.60%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.02) + 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.