The WACC of Fuwei Films (Holdings) Co Ltd (FFHL) is 7.3%.
Range | Selected | |
Cost of equity | 6.0% - 8.7% | 7.35% |
Tax rate | 10.5% - 18.3% | 14.4% |
Cost of debt | 4.5% - 7.0% | 5.75% |
WACC | 6.0% - 8.7% | 7.3% |
Category | Low | High |
Long-term bond rate | 4.2% | 4.7% |
Equity market risk premium | 5.0% | 6.0% |
Adjusted beta | 0.36 | 0.59 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.0% | 8.7% |
Tax rate | 10.5% | 18.3% |
Debt/Equity ratio | 0 | 0 |
Cost of debt | 4.5% | 7.0% |
After-tax WACC | 6.0% | 8.7% |
Selected WACC | 7.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
FFHL | Fuwei Films (Holdings) Co Ltd | 0 | 0.91 | 0.91 |
ACRB | Asia Carbon Industries Inc | 0.04 | -0.37 | -0.36 |
ADMT | ADM Tronics Unlimited Inc | 0.13 | -0.13 | -0.12 |
CHCC | China Chemical Corp | 2.04 | 0.26 | 0.09 |
CRKN | Crown Electrokinetics Corp. | 0.19 | 1 | 0.86 |
GDNP.V | Good Natured Products Inc | 34.63 | -1.11 | -0.04 |
GURE | Gulf Resources Inc | 0.12 | -0.57 | -0.52 |
MX.TO | Methanex Corp | 1.4 | 1.94 | 0.86 |
ONBI | One Bio Corp | 0.47 | -0.85 | -0.6 |
PRH.V | Pearl River Holdings Ltd | 1.91 | -0.45 | -0.17 |
Low | High | |
Unlevered beta | -0.14 | 0.02 |
Relevered beta | 0.04 | 0.39 |
Adjusted relevered beta | 0.36 | 0.59 |
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 FFHL:
cost_of_equity (7.35%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (0.36) + 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.