003490.KS WACC - Weighted Average Cost of Capital
The WACC of Korean Air Lines Co Ltd (003490.KS) is 6.4%.
| Range | Selected | |
| Cost of equity | 8.3% - 16.1% | 12.2% |
| Tax rate | 26.9% - 29.5% | 28.2% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 4.5% - 8.3% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.9 | 1.76 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.3% | 16.1% |
| Tax rate | 26.9% | 29.5% |
| Debt/Equity ratio | 2.33 | 2.33 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 4.5% | 8.3% |
| Selected WACC | 6.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 003490.KS | Korean Air Lines Co Ltd | 2.33 | 0.42 | 0.16 |
| 020560.KS | Asiana Airlines Inc | 3.29 | 0.4 | 0.12 |
| 089590.KS | JejuAir Co Ltd | 1.31 | 0.56 | 0.29 |
| 091810.KS | T'way Air Co Ltd | 1.16 | 0.62 | 0.34 |
| 180640.KS | Hanjin Kal | 0.08 | 1.22 | 1.16 |
| 298690.KS | Air Busan Co Ltd | 2.94 | 0.59 | 0.19 |
| 600221.SS | Hainan Airlines Holding Co Ltd | 1.96 | 1.83 | 0.76 |
| HVN.VN | Vietnam Airlines JSC | 0.25 | 1.19 | 1.01 |
| INDIGO.NS | Interglobe Aviation Ltd | 0.24 | 1.15 | 0.98 |
| QAN.AX | Qantas Airways Ltd | 0.43 | 1.12 | 0.86 |
| Low | High | |
| Unlevered beta | 0.32 | 0.8 |
| Relevered beta | 0.85 | 2.13 |
| Adjusted relevered beta | 0.9 | 1.76 |
003490.KS'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 003490.KS:
cost_of_equity (12.20%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.9) + 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.