688588.SS WACC - Weighted Average Cost of Capital
The WACC of Linkage Software Co Ltd (688588.SS) is 12.2%.
| Range | Selected | |
| Cost of equity | 11.3% - 14.1% | 12.7% |
| Tax rate | 9.8% - 11.5% | 10.65% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 10.9% - 13.5% | 12.2% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.41 | 1.46 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.3% | 14.1% |
| Tax rate | 9.8% | 11.5% |
| Debt/Equity ratio | 0.06 | 0.06 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 10.9% | 13.5% |
| Selected WACC | 12.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 688588.SS | Linkage Software Co Ltd | 0.06 | 1.83 | 1.73 |
| 002063.SZ | YGSOFT Inc | 0.01 | 1.37 | 1.36 |
| 1588.HK | Chanjet Information Technology Co Ltd | 0 | 0.73 | 0.73 |
| 300302.SZ | Toyou Feiji Electronics Co Ltd | 0.05 | 1.82 | 1.73 |
| 300359.SZ | Qtone Education Group Guangdong Co Ltd | 0.01 | 1.82 | 1.81 |
| 300378.SZ | Digiwin Software Co Ltd | 0.01 | 1.56 | 1.54 |
| 300663.SZ | Client Service International Inc | 0.17 | 1.89 | 1.64 |
| 300687.SZ | Guangzhou Sie Consulting Co Ltd | 0.05 | 1.56 | 1.5 |
| 603636.SS | Linewell Software Co Ltd | 0.24 | 1.05 | 0.86 |
| 9911.HK | Newborn Town Inc | 0.01 | 1.56 | 1.56 |
| Low | High | |
| Unlevered beta | 1.52 | 1.59 |
| Relevered beta | 1.61 | 1.69 |
| Adjusted relevered beta | 1.41 | 1.46 |
688588.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 688588.SS:
cost_of_equity (12.70%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.41) + 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.