The WACC of Road Environment Technology Co Ltd (688156.SS) is 6.1%.
Range | Selected | |
Cost of equity | 5.4% - 7.8% | 6.6% |
Tax rate | 14.0% - 15.5% | 14.75% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.2% - 7.0% | 6.1% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.45 | 0.58 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.4% | 7.8% |
Tax rate | 14.0% | 15.5% |
Debt/Equity ratio | 0.27 | 0.27 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.2% | 7.0% |
Selected WACC | 6.1% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
688156.SS | Road Environment Technology Co Ltd | 0.27 | 1.04 | 0.85 |
002200.SZ | Yunnan Yuntou Ecology and Environment Technology Co Ltd | 0.91 | 0.86 | 0.48 |
003027.SZ | Tongxing Environmental Protection Technology Co Ltd | 0.23 | 0.94 | 0.79 |
029960.KQ | Koentec Co Ltd | 0.06 | 0.16 | 0.15 |
1153.HK | Jiayuan Services Holdings Ltd | 0.08 | 0.28 | 0.26 |
1253.HK | China Greenland Broad Greenstate Group Co Ltd | 8.11 | 0.95 | 0.12 |
1845.HK | Weigang Environmental Technology Holding Group Ltd | 0.46 | -0.19 | -0.14 |
3718.HK | Beijing Enterprises Urban Resources Group Ltd | 2.11 | 0.24 | 0.09 |
CYPARK.KL | Cypark Resources Bhd | 2.02 | 0.96 | 0.35 |
LS9.SI | Leader Environmental Technologies Ltd | 0.35 | 0.08 | 0.06 |
Low | High | |
Unlevered beta | 0.14 | 0.3 |
Relevered beta | 0.18 | 0.37 |
Adjusted relevered beta | 0.45 | 0.58 |
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.