The WACC of Sungchang Autotech Co Ltd (080470.KQ) is 5.0%.
| Range | Selected | |
| Cost of equity | 6.10% - 8.40% | 7.25% |
| Tax rate | 17.50% - 31.10% | 24.30% |
| Cost of debt | 4.70% - 4.80% | 4.75% |
| WACC | 4.7% - 5.2% | 5.0% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.52 | 0.64 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.10% | 8.40% |
| Tax rate | 17.50% | 31.10% |
| Debt/Equity ratio | 1.68 | 1.68 |
| Cost of debt | 4.70% | 4.80% |
| After-tax WACC | 4.7% | 5.2% |
| Selected WACC | 5.0% | |
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 080470.KQ:
cost_of_equity (7.25%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.52) + 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.