603788.SS WACC - Weighted Average Cost of Capital
The WACC of Ningbo Gaofa Automotive Control System Co Ltd (603788.SS) is 11.5%.
| Range | Selected | |
| Cost of equity | 9.9% - 13.5% | 11.7% |
| Tax rate | 11.8% - 13.1% | 12.45% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 9.7% - 13.2% | 11.5% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.18 | 1.38 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.9% | 13.5% |
| Tax rate | 11.8% | 13.1% |
| Debt/Equity ratio | 0.04 | 0.04 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 9.7% | 13.2% |
| Selected WACC | 11.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 603788.SS | Ningbo Gaofa Automotive Control System Co Ltd | 0.04 | 1.12 | 1.09 |
| 002196.SZ | Zhejiang Founder Motor Co Ltd | 0.3 | 1.88 | 1.49 |
| 002703.SZ | Zhejiang Shibao Co Ltd | 0.03 | 1.18 | 1.15 |
| 002765.SZ | Landai Technology Group Corp Ltd | 0.17 | 1.94 | 1.69 |
| 002865.SZ | Hainan Drinda Automotive Trim Co Ltd | 0.63 | 1.51 | 0.97 |
| 003033.SZ | Qingdao CHOHO Industrial Co Ltd | 0.14 | 0.84 | 0.75 |
| 300421.SZ | Jiangsu LiXing General Steel Ball Co Ltd | 0.07 | 1.35 | 1.27 |
| 300507.SZ | Jiangsu Olive Sensors High-Tech Co Ltd | 0.07 | 1.76 | 1.66 |
| 300580.SZ | Wuxi Best Precision Machinery Co Ltd | 0 | 1.82 | 1.82 |
| 300928.SZ | HAXC Holdings Beijing Co Ltd | 0.02 | 1.61 | 1.58 |
| Low | High | |
| Unlevered beta | 1.23 | 1.52 |
| Relevered beta | 1.27 | 1.57 |
| Adjusted relevered beta | 1.18 | 1.38 |
603788.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 603788.SS:
cost_of_equity (11.70%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.18) + 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.