The WACC of Zhejiang Yongjin Metal Technology Co Ltd (603995.SS) is 7.8%.
Range | Selected | |
Cost of equity | 9.0% - 12.5% | 10.75% |
Tax rate | 18.3% - 18.9% | 18.6% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.9% - 8.8% | 7.8% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 1.04 | 1.24 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.0% | 12.5% |
Tax rate | 18.3% | 18.9% |
Debt/Equity ratio | 0.78 | 0.78 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.9% | 8.8% |
Selected WACC | 7.8% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
603995.SS | Zhejiang Yongjin Metal Technology Co Ltd | 0.78 | 1.26 | 0.77 |
000629.SZ | Pangang Group Vanadium Titanium & Resources Co Ltd | 0.01 | 1.27 | 1.26 |
002075.SZ | Jiangsu Shagang Co Ltd | 0.86 | 1.71 | 1 |
1266.HK | Xiwang Special Steel Co Ltd | 207.07 | 0.97 | 0.01 |
600117.SS | Xining Special Steel Co Ltd | 0.46 | 1.94 | 1.41 |
600231.SS | Lingyuan Iron & Steel Co Ltd | 1.06 | 1.07 | 0.58 |
600408.SS | Shanxi Antai Group Co Ltd | 0.53 | 1.3 | 0.91 |
600507.SS | Fangda Special Steel Technology Co Ltd | 0.61 | 0.86 | 0.58 |
600581.SS | Xinjiang Ba Yi Iron & Steel Co Ltd | 3.83 | 1.2 | 0.29 |
600997.SS | Kailuan Energy Chemical Co Ltd | 0.69 | 1.07 | 0.69 |
Low | High | |
Unlevered beta | 0.64 | 0.83 |
Relevered beta | 1.06 | 1.36 |
Adjusted relevered beta | 1.04 | 1.24 |
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 603995.SS:
cost_of_equity (10.75%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.04) + 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.