The WACC of Hillstone Networks Co Ltd (688030.SS) is 9.6%.
Range | Selected | |
Cost of equity | 8.7% - 12.7% | 10.7% |
Tax rate | 14.1% - 19.4% | 16.75% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 8.0% - 11.3% | 9.6% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.99 | 1.27 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.7% | 12.7% |
Tax rate | 14.1% | 19.4% |
Debt/Equity ratio | 0.2 | 0.2 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 8.0% | 11.3% |
Selected WACC | 9.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
688030.SS | Hillstone Networks Co Ltd | 0.2 | 1.49 | 1.28 |
000971.SZ | Gosun Holding Co Ltd | 0.61 | 0.98 | 0.66 |
300017.SZ | Wangsu Science & Technology Co Ltd | 0.03 | 1.88 | 1.83 |
300738.SZ | Guangdong Aofei Data Technology Co Ltd | 0.35 | 1.79 | 1.4 |
300766.SZ | Zhejiang Merit Interactive Network Technology Co Ltd | 0 | 1.69 | 1.69 |
3633.T | GMO Pepabo Inc | 0.14 | 0.72 | 0.65 |
3680.HK | Suoxinda Holdings Ltd | 0.15 | 0.11 | 0.1 |
603138.SS | Beijing Vastdata Technology Co Ltd | 0 | 0.97 | 0.97 |
603881.SS | Shanghai AtHub Co Ltd | 0.22 | 1.36 | 1.16 |
6183.TW | Trade-Van Information Services Co | 0.01 | 0.38 | 0.38 |
Low | High | |
Unlevered beta | 0.84 | 1.21 |
Relevered beta | 0.99 | 1.4 |
Adjusted relevered beta | 0.99 | 1.27 |
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 688030.SS:
cost_of_equity (10.70%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.99) + 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.