The WACC of Fujian Tianma Science and Technology Group Co Ltd (603668.SS) is 8.6%.
Range | Selected | |
Cost of equity | 9.4% - 13.7% | 11.55% |
Tax rate | 12.3% - 14.0% | 13.15% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.3% - 9.8% | 8.6% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 1.09 | 1.41 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.4% | 13.7% |
Tax rate | 12.3% | 14.0% |
Debt/Equity ratio | 0.7 | 0.7 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.3% | 9.8% |
Selected WACC | 8.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
603668.SS | Fujian Tianma Science and Technology Group Co Ltd | 0.7 | 0.89 | 0.55 |
000702.SZ | Hunan Zhenghong Science and Technology Develop Co Ltd | 0.12 | 1.25 | 1.13 |
000893.SZ | Asia Potash International Investment Guangzhou Co Ltd | 0.08 | 1.52 | 1.42 |
002100.SZ | Tecon Biology Co Ltd | 0.81 | 1.12 | 0.66 |
002166.SZ | Guilin Layn Natural Ingredients Corp | 0.16 | 1.16 | 1.02 |
002852.SZ | Daodaoquan Grain and Oil Co Ltd | 0.31 | 1.26 | 1 |
300268.SZ | Joyvio Agriculture Development Co Ltd | 3.17 | 0.9 | 0.24 |
300505.SZ | Kunming Chuan Jin Nuo Chemical Co Ltd | 0.15 | 1.37 | 1.22 |
600419.SS | Xinjiang Tianrun Dairy Co Ltd | 0.67 | 1.18 | 0.75 |
603363.SS | Fujian Aonong Biological Technology Group Incorporation Ltd | 0.42 | 0.58 | 0.43 |
Low | High | |
Unlevered beta | 0.71 | 1 |
Relevered beta | 1.13 | 1.61 |
Adjusted relevered beta | 1.09 | 1.41 |
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 603668.SS:
cost_of_equity (11.55%) = 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.