The WACC of SK Discovery Co Ltd (006120.KS) is 6.8%.
Range | Selected | |
Cost of equity | 6.4% - 9.5% | 7.95% |
Tax rate | 27.8% - 30.1% | 28.95% |
Cost of debt | 4.0% - 14.9% | 9.45% |
WACC | 3.4% - 10.3% | 6.8% |
Category | Low | High |
Long-term bond rate | 3.1% | 3.6% |
Equity market risk premium | 5.8% | 6.8% |
Adjusted beta | 0.57 | 0.8 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.4% | 9.5% |
Tax rate | 27.8% | 30.1% |
Debt/Equity ratio | 5.6 | 5.6 |
Cost of debt | 4.0% | 14.9% |
After-tax WACC | 3.4% | 10.3% |
Selected WACC | 6.8% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
006120.KS | SK Discovery Co Ltd | 5.6 | 0.61 | 0.12 |
004690.KS | Samchully Co Ltd | 2.59 | 0.47 | 0.17 |
017940.KS | E1 Corp | 17.43 | 0.66 | 0.05 |
018670.KS | SK Gas Ltd | 1.06 | 0.62 | 0.36 |
071320.KS | Korea District Heating Corp | 4.51 | -0.16 | -0.04 |
600903.SS | Guizhou Gas Group Corporation Ltd | 0.71 | 0.51 | 0.34 |
956.HK | China Suntien Green Energy Corp Ltd | 0.8 | 1.11 | 0.71 |
PSTC.BK | Power Solution Technologies PCL | 1.01 | 0 | 0 |
SGP.BK | Siamgas and Petrochemicals PCL | 2.26 | 0.22 | 0.09 |
Y35.SI | AnAn International Ltd | 6.92 | -1.2 | -0.2 |
Low | High | |
Unlevered beta | 0.07 | 0.14 |
Relevered beta | 0.36 | 0.7 |
Adjusted relevered beta | 0.57 | 0.8 |
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 006120.KS:
cost_of_equity (7.95%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.57) + 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.