The WACC of Qingdao Richen Food Co Ltd (603755.SS) is 10.3%.
Range | Selected | |
Cost of equity | 9.2% - 12.1% | 10.65% |
Tax rate | 13.9% - 14.5% | 14.2% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 8.9% - 11.6% | 10.3% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 1.06 | 1.18 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.2% | 12.1% |
Tax rate | 13.9% | 14.5% |
Debt/Equity ratio | 0.07 | 0.07 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 8.9% | 11.6% |
Selected WACC | 10.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
603755.SS | Qingdao Richen Food Co Ltd | 0.07 | 0.91 | 0.86 |
002956.SZ | Guilin Seamild Foods Co Ltd | 0.04 | 1.09 | 1.05 |
003000.SZ | Huawen Food Co Ltd | 0.05 | 1.36 | 1.3 |
1256.TW | Sunjuice Holdings Co Ltd | 0.09 | 0.58 | 0.53 |
300673.SZ | Petpal Pet Nutrition Technology Co Ltd | 0.2 | 1.19 | 1.02 |
300858.SZ | Beijing Scitop Bio tech Co Ltd | 0 | 1.28 | 1.28 |
300898.SZ | Panda Dairy Corp | 0.01 | 1.39 | 1.38 |
300915.SZ | Shanghai Hi-Road Food Technology Co Ltd | 0.02 | 1.39 | 1.37 |
603697.SS | YouYou Foods Co Ltd | 0.02 | 0.66 | 0.65 |
605337.SS | Zhe Jiang Li Zi Yuan Food Co Ltd | 0.15 | 1.31 | 1.16 |
Low | High | |
Unlevered beta | 1.04 | 1.2 |
Relevered beta | 1.09 | 1.27 |
Adjusted relevered beta | 1.06 | 1.18 |
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 603755.SS:
cost_of_equity (10.65%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.06) + 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.