The WACC of National Commercial Bank SJSC (1180.SR) is 8.8%.
Range | Selected | |
Cost of equity | 10.9% - 14.6% | 12.75% |
Tax rate | 11.1% - 11.5% | 11.3% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.8% - 9.8% | 8.8% |
Category | Low | High |
Long-term bond rate | 5.9% | 6.4% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.81 | 1.09 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 10.9% | 14.6% |
Tax rate | 11.1% | 11.5% |
Debt/Equity ratio | 0.92 | 0.92 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.8% | 9.8% |
Selected WACC | 8.8% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
1180.SR | National Commercial Bank SJSC | 0.92 | 1.16 | 0.64 |
1010.SR | Riyad Bank SJSC | 0.16 | 1.38 | 1.21 |
1020.SR | Bank Aljazira JSC | 0.78 | 1.04 | 0.61 |
1030.SR | Saudi Investment Bank SJSC | 1.35 | 0.75 | 0.34 |
1050.SR | Banque Saudi Fransi SJSC | 1.93 | 1.11 | 0.41 |
1120.SR | Al Rajhi Banking & Investment Corporation SJSC | 0.02 | 0.97 | 0.95 |
1140.SR | Bank Albilad Sjsc | 0.09 | 0.88 | 0.82 |
1150.SR | Alinma Bank SJSC | 1.67 | 0.92 | 0.37 |
2886.TW | Mega Financial Holding Co Ltd | 0.67 | 0.28 | 0.18 |
7182.T | Japan Post Bank Co Ltd | 5.62 | 0.83 | 0.14 |
Low | High | |
Unlevered beta | 0.4 | 0.62 |
Relevered beta | 0.72 | 1.13 |
Adjusted relevered beta | 0.81 | 1.09 |
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 1180.SR:
cost_of_equity (12.75%) = risk_free_rate (6.15%) + equity_risk_premium (6.60%) * adjusted_beta (0.81) + 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.