The WACC of AK Holdings Inc (006840.KS) is 5.2%.
Range | Selected | |
Cost of equity | 14.6% - 21.8% | 18.2% |
Tax rate | 19.3% - 20.9% | 20.1% |
Cost of debt | 4.1% - 7.0% | 5.55% |
WACC | 4.0% - 6.5% | 5.2% |
Category | Low | High |
Long-term bond rate | 3.1% | 3.6% |
Equity market risk premium | 5.8% | 6.8% |
Adjusted beta | 1.98 | 2.6 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 14.6% | 21.8% |
Tax rate | 19.3% | 20.9% |
Debt/Equity ratio | 16.46 | 16.46 |
Cost of debt | 4.1% | 7.0% |
After-tax WACC | 4.0% | 6.5% |
Selected WACC | 5.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
006840.KS | AK Holdings Inc | 16.46 | 0.28 | 0.02 |
000150.KS | Doosan Corp | 0.76 | 2 | 1.24 |
001040.KS | CJ Corp | 3.52 | 0.92 | 0.24 |
004800.KS | Hyosung Corp | 0.85 | 0.4 | 0.24 |
2722.HK | Chongqing Machinery & Electric Co Ltd | 0.99 | 0.81 | 0.45 |
GILLANDERS.NS | Gillanders Arbuthnot & Co Ltd | 0.48 | -0.04 | -0.03 |
GODREJIND.NS | Godrej Industries Ltd | 0.74 | 0.85 | 0.53 |
OMZZP.ME | OMZ PAO | 0.3 | 0.02 | 0.02 |
SUC.BK | Saha-Union PCL | 0.06 | 0.22 | 0.21 |
TEXCHEM.KL | Texchem Resources Bhd | 4.07 | 0.23 | 0.05 |
Low | High | |
Unlevered beta | 0.15 | 0.24 |
Relevered beta | 2.46 | 3.39 |
Adjusted relevered beta | 1.98 | 2.6 |
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 006840.KS:
cost_of_equity (18.20%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (1.98) + 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.