688156.SS
Road Environment Technology Co Ltd
Price:  
20.07 
CNY
Volume:  
5,116,974
China | Commercial Services & Supplies

688156.SS WACC - Weighted Average Cost of Capital

The WACC of Road Environment Technology Co Ltd (688156.SS) is 6.1%.

The Cost of Equity of Road Environment Technology Co Ltd (688156.SS) is 6.6%.
The Cost of Debt of Road Environment Technology Co Ltd (688156.SS) is 5%.

RangeSelected
Cost of equity5.4% - 7.8%6.6%
Tax rate14.0% - 15.5%14.75%
Cost of debt5.0% - 5.0%5%
WACC5.2% - 7.0%6.1%
WACC

688156.SS WACC calculation

CategoryLowHigh
Long-term bond rate2.7%3.2%
Equity market risk premium6.1%7.1%
Adjusted beta0.450.58
Additional risk adjustments0.0%0.5%
Cost of equity5.4%7.8%
Tax rate14.0%15.5%
Debt/Equity ratio
0.270.27
Cost of debt5.0%5.0%
After-tax WACC5.2%7.0%
Selected WACC6.1%

688156.SS WACC - Detailed calculations of Beta

LowHigh
Unlevered beta0.140.3
Relevered beta0.180.37
Adjusted relevered beta0.450.58

688156.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 688156.SS:

cost_of_equity (6.60%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.45) + 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.