603727.SS WACC - Weighted Average Cost of Capital
The WACC of BOMESC Offshore Engineering Co Ltd (603727.SS) is 7.2%.
| Range | Selected | |
| Cost of equity | 6.3% - 9.1% | 7.7% |
| Tax rate | 6.4% - 14.7% | 10.55% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.1% - 8.4% | 7.2% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.6 | 0.77 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.3% | 9.1% |
| Tax rate | 6.4% | 14.7% |
| Debt/Equity ratio | 0.18 | 0.18 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.1% | 8.4% |
| Selected WACC | 7.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 603727.SS | BOMESC Offshore Engineering Co Ltd | 0.18 | 1.15 | 0.98 |
| 002207.SZ | Xinjiang Zhundong Petroleum Technology Co Ltd | 0.07 | 0.51 | 0.47 |
| 002554.SZ | China Oil Hbp Science & Technology Co Ltd | 0.58 | 0.88 | 0.57 |
| 1080.HK | Shengli Oil & Gas Pipe Holdings Ltd | 2.37 | 0.44 | 0.14 |
| 1251.HK | SPT Energy Group Inc | 1.17 | 0 | 0 |
| 1938.HK | Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Ltd | 8.35 | 0.29 | 0.03 |
| 2178.HK | Petro-king Oilfield Services Ltd | 1.35 | 0.28 | 0.13 |
| 300084.SZ | Haimo Technologies Group Corp | 0.11 | 0.6 | 0.54 |
| 300164.SZ | Tong Petrotech Corp | 0.1 | 0.82 | 0.75 |
| 603619.SS | Zhongman Petroleum and Natural Gas Group Corp Ltd | 0.47 | 0.88 | 0.62 |
| Low | High | |
| Unlevered beta | 0.34 | 0.55 |
| Relevered beta | 0.4 | 0.66 |
| Adjusted relevered beta | 0.6 | 0.77 |
603727.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 603727.SS:
cost_of_equity (7.70%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.6) + 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.