605088.SS WACC - Weighted Average Cost of Capital
The WACC of GSP Automotive Group Wenzhou Co Ltd (605088.SS) is 8.6%.
| Range | Selected | |
| Cost of equity | 8.9% - 11.5% | 10.2% |
| Tax rate | 12.7% - 13.4% | 13.05% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.7% - 9.6% | 8.6% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.02 | 1.09 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.9% | 11.5% |
| Tax rate | 12.7% | 13.4% |
| Debt/Equity ratio | 0.36 | 0.36 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.7% | 9.6% |
| Selected WACC | 8.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 605088.SS | GSP Automotive Group Wenzhou Co Ltd | 0.36 | 1.2 | 0.91 |
| 002355.SZ | Xingmin Intelligent Transportation Systems Group Co Ltd | 0.2 | 1.31 | 1.12 |
| 002363.SZ | Shandong Longji Machinery Co Ltd | 0.15 | 1.13 | 1 |
| 002590.SZ | Zhejiang VIE Science & Technology Co Ltd | 0.13 | 1.62 | 1.46 |
| 300176.SZ | GuangDong PaiSheng Intelligent Technology Co Ltd | 0.29 | 0.88 | 0.7 |
| 600178.SS | Harbin Dongan Auto Engine Co Ltd | 0.27 | 0.9 | 0.73 |
| 603035.SS | Jiangsu Changshu Automotive Trim Group Co Ltd | 0.45 | 1.14 | 0.82 |
| 603161.SS | Kehua Holdings Co Ltd | 0.43 | 0.88 | 0.64 |
| 603586.SS | Shandong Gold Phoenix Co Ltd | 0.03 | 0.86 | 0.84 |
| 603768.SS | Changqing Machinery Co Ltd | 0.76 | 1.05 | 0.63 |
| Low | High | |
| Unlevered beta | 0.78 | 0.87 |
| Relevered beta | 1.03 | 1.13 |
| Adjusted relevered beta | 1.02 | 1.09 |
605088.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 605088.SS:
cost_of_equity (10.20%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.02) + 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.