The WACC of Yifeng Pharmacy Chain Co Ltd (603939.SS) is 8.2%.
Range | Selected | |
Cost of equity | 8.7% - 11.1% | 9.9% |
Tax rate | 24.2% - 24.8% | 24.5% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.3% - 9.0% | 8.2% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.98 | 1.04 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.7% | 11.1% |
Tax rate | 24.2% | 24.8% |
Debt/Equity ratio | 0.39 | 0.39 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.3% | 9.0% |
Selected WACC | 8.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
603939.SS | Yifeng Pharmacy Chain Co Ltd | 0.39 | 1.38 | 1.07 |
002697.SZ | Chengdu Hongqi Chain Co Ltd | 0.12 | 1.1 | 1.01 |
002727.SZ | Yixintang Pharmaceutical Group Co Ltd | 0.48 | 1.37 | 1 |
3148.T | Create SD Holdings Co Ltd | 0 | 0.33 | 0.33 |
3549.T | Kusuri No Aoki Holdings Co Ltd | 0.27 | 0.52 | 0.43 |
600833.SS | Shanghai No.1 Pharmacy Co Ltd | 0.12 | 0.85 | 0.78 |
603233.SS | DaShenLin Pharmaceutical Group Co Ltd | 0.67 | 1.28 | 0.85 |
603708.SS | Jiajiayue Group Co Ltd | 0.79 | 1.13 | 0.71 |
603883.SS | LBX Pharmacy Chain JSC | 0.73 | 1.24 | 0.8 |
9627.T | AIN Holdings Inc | 0.03 | 0.5 | 0.49 |
Low | High | |
Unlevered beta | 0.75 | 0.82 |
Relevered beta | 0.97 | 1.06 |
Adjusted relevered beta | 0.98 | 1.04 |
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 603939.SS:
cost_of_equity (9.90%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.98) + 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.