The WACC of Zhuzhou Huarui Precision Cutting Tools Co Ltd (688059.SS) is 10.5%.
Range | Selected | |
Cost of equity | 9.6% - 14.1% | 11.85% |
Tax rate | 12.2% - 13.0% | 12.6% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 8.7% - 12.4% | 10.5% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 1.13 | 1.47 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.6% | 14.1% |
Tax rate | 12.2% | 13.0% |
Debt/Equity ratio | 0.22 | 0.22 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 8.7% | 12.4% |
Selected WACC | 10.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
688059.SS | Zhuzhou Huarui Precision Cutting Tools Co Ltd | 0.22 | 2.25 | 1.89 |
1455.HK | Fourace Industries Group Holdings Ltd | 0.01 | 0.16 | 0.16 |
1643.HK | Modern Chinese Medicine Group Co Ltd | 0 | 0.38 | 0.38 |
300908.SZ | Zhongjing Food Co Ltd | 0 | 1.58 | 1.57 |
300946.SZ | Hengda New Materials Fujian Co Ltd | 0.03 | 1.62 | 1.58 |
301.HK | Sanvo Fine Chemicals Group Ltd | 0.45 | -0.08 | -0.06 |
688550.SS | XiAn Manareco New Materials Co Ltd | 0.01 | 1.51 | 1.5 |
688607.SS | CareRay Digital Medical Technology Co Ltd | 0.01 | 1.44 | 1.43 |
688665.SS | Cubic Sensor and Instrument Co Ltd | 0.05 | 1.48 | 1.41 |
688687.SS | Beijing Kawin Technology Share-holding Co Ltd | 0.08 | 1.54 | 1.44 |
8659.HK | Yik Wo International Holdings Ltd | 0.03 | -0.51 | -0.5 |
Low | High | |
Unlevered beta | 1.41 | 1.44 |
Relevered beta | 1.19 | 1.7 |
Adjusted relevered beta | 1.13 | 1.47 |
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 688059.SS:
cost_of_equity (11.85%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.13) + 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.