The WACC of Shanghai Golden Bridge Info Tech Co Ltd (603918.SS) is 10.2%.
Range | Selected | |
Cost of equity | 8.5% - 11.9% | 10.2% |
Tax rate | 14.1% - 16.3% | 15.2% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 8.5% - 11.9% | 10.2% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.95 | 1.16 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.5% | 11.9% |
Tax rate | 14.1% | 16.3% |
Debt/Equity ratio | 0.01 | 0.01 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 8.5% | 11.9% |
Selected WACC | 10.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
603918.SS | Shanghai Golden Bridge Info Tech Co Ltd | 0.01 | 1.59 | 1.58 |
1588.HK | Chanjet Information Technology Co Ltd | 0 | 0.63 | 0.63 |
300096.SZ | YLZ Information Technology Co Ltd | 0.02 | 0.95 | 0.94 |
300209.SZ | TIZA Information Industry Corporation Inc | 0.01 | 0.29 | 0.28 |
300359.SZ | Qtone Education Group Guangdong Co Ltd | 0.01 | 1.85 | 1.84 |
300513.SZ | Beijing E-techstar Co Ltd | 0.29 | 1.53 | 1.23 |
300532.SZ | New Trend International Logis-Tech Co Ltd | 0.07 | 1.31 | 1.24 |
600571.SS | Sunyard Technology Co Ltd | 0 | 1.53 | 1.53 |
603636.SS | Linewell Software Co Ltd | 0.21 | 1.04 | 0.89 |
688555.SS | Essence Information Technology Co Ltd | 1.37 | -1.25 | -0.58 |
Low | High | |
Unlevered beta | 0.92 | 1.23 |
Relevered beta | 0.93 | 1.24 |
Adjusted relevered beta | 0.95 | 1.16 |
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 603918.SS:
cost_of_equity (10.20%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.95) + 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.