603898.SS WACC - Weighted Average Cost of Capital
The WACC of Guangzhou Holike Creative Home Co Ltd (603898.SS) is 9.4%.
| Range | Selected | |
| Cost of equity | 9.0% - 11.8% | 10.4% |
| Tax rate | 12.2% - 14.0% | 13.1% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 8.2% - 10.6% | 9.4% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.03 | 1.15 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.0% | 11.8% |
| Tax rate | 12.2% | 14.0% |
| Debt/Equity ratio | 0.2 | 0.2 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 8.2% | 10.6% |
| Selected WACC | 9.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 603898.SS | Guangzhou Holike Creative Home Co Ltd | 0.2 | 1.19 | 1.01 |
| 002718.SZ | Zhejiang Youpon Integrated Ceiling Co Ltd | 0.13 | 0.93 | 0.84 |
| 002853.SZ | Guangdong Piano Customized Furniture Co Ltd | 0.11 | 1.18 | 1.07 |
| 300749.SZ | Guangdong Topstrong Living Innovation and Integration Co Ltd | 0.19 | 1.32 | 1.13 |
| 603038.SS | Dongguan Huali industries Co Ltd | 0.17 | 0.97 | 0.84 |
| 603180.SS | GoldenHome Living Co Ltd | 0.6 | 1.34 | 0.89 |
| 603326.SS | Nanjing OLO Home Furnishing Co Ltd | 0.15 | 1.56 | 1.38 |
| 603610.SS | Keeson Technology Corp Ltd | 0.17 | 1.61 | 1.4 |
| 603709.SS | Zoy Home Furnishing Co Ltd | 0.38 | 0.66 | 0.5 |
| 603818.SS | QuMei Home Furnishings Group Co Ltd | 1.25 | 1.81 | 0.87 |
| Low | High | |
| Unlevered beta | 0.88 | 1.03 |
| Relevered beta | 1.04 | 1.22 |
| Adjusted relevered beta | 1.03 | 1.15 |
603898.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 603898.SS:
cost_of_equity (10.40%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.03) + 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.