603806.SS WACC - Weighted Average Cost of Capital

The WACC of Hangzhou First Applied Material Co Ltd (603806.SS) is 10.8%.

The Cost of Equity of Hangzhou First Applied Material Co Ltd (603806.SS) is 11.40%.

The Cost of Debt of Hangzhou First Applied Material Co Ltd (603806.SS) is 5.00%.

	Range	Selected
Cost of equity	9.90% - 12.90%	11.40%
Tax rate	10.50% - 11.50%	11.00%
Cost of debt	5.00% - 5.00%	5.00%
WACC	9.5% - 12.2%	10.8%

WACC

603806.SS WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.18	1.29

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.90%	12.90%

Tax rate	10.50%	11.50%
Debt/Equity ratio	0.09	0.09
Cost of debt	5.00%	5.00%

After-tax WACC	9.5%	12.2%


Selected WACC	10.8%

603806.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 603806.SS:

cost_of_equity (11.40%) = 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.