The WACC of SFA Semicon Co Ltd (036540.KQ) is 9.4%.
| Range | Selected | |
| Cost of equity | 8.40% - 12.10% | 10.25% |
| Tax rate | 16.90% - 25.10% | 21.00% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 7.6% - 11.1% | 9.4% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.92 | 1.18 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.40% | 12.10% |
| Tax rate | 16.90% | 25.10% |
| Debt/Equity ratio | 0.18 | 0.18 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 7.6% | 11.1% |
| Selected WACC | 9.4% | |
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 036540.KQ:
cost_of_equity (10.25%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.92) + 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.