603885.SS WACC - Weighted Average Cost of Capital
The WACC of JUNEYAO AIRLINES Co Ltd (603885.SS) is 6.7%.
| Range | Selected | |
| Cost of equity | 8.0% - 12.3% | 10.15% |
| Tax rate | 23.9% - 24.2% | 24.05% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.7% - 7.6% | 6.7% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.88 | 1.21 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.0% | 12.3% |
| Tax rate | 23.9% | 24.2% |
| Debt/Equity ratio | 1.22 | 1.22 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.7% | 7.6% |
| Selected WACC | 6.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 603885.SS | JUNEYAO AIRLINES Co Ltd | 1.22 | 1.31 | 0.68 |
| 002928.SZ | China Express Airlines Co Ltd | 1.47 | 1.48 | 0.7 |
| 200152.SZ | Shandong Airlines Co Ltd | 26.15 | -0.27 | -0.01 |
| 600029.SS | China Southern Airlines Co Ltd | 2 | 0.89 | 0.35 |
| 600115.SS | China Eastern Airlines Corp Ltd | 2.22 | 0.86 | 0.32 |
| 600221.SS | Hainan Airlines Holding Co Ltd | 1.94 | 1.77 | 0.71 |
| 601021.SS | Spring Airlines Co Ltd | 0.36 | 0.87 | 0.68 |
| 601111.SS | Air China Ltd | 1.7 | 1.01 | 0.44 |
| AIRASIA.KL | Airasia Group Bhd | 4.93 | 1.89 | 0.4 |
| HVN.VN | Vietnam Airlines JSC | 0.24 | 1.17 | 0.99 |
| Low | High | |
| Unlevered beta | 0.42 | 0.68 |
| Relevered beta | 0.82 | 1.31 |
| Adjusted relevered beta | 0.88 | 1.21 |
603885.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 603885.SS:
cost_of_equity (10.15%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.88) + 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.