The WACC of Cathay Chemical Works Inc (1713.TW) is 7.9%.
Range | Selected | |
Cost of equity | 6.8% - 9.0% | 7.9% |
Tax rate | 0.6% - 1.1% | 0.85% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.8% - 9.0% | 7.9% |
Category | Low | High |
Long-term bond rate | 2.0% | 2.5% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.8 | 0.85 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.8% | 9.0% |
Tax rate | 0.6% | 1.1% |
Debt/Equity ratio | 0 | 0 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.8% | 9.0% |
Selected WACC | 7.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
1713.TW | Cathay Chemical Works Inc | 0 | 0.4 | 0.4 |
1307.TW | San Fang Chemical Industry Co Ltd | 0.26 | 0.85 | 0.68 |
1721.TW | Sunko Ink Co Ltd | 0.48 | 1.14 | 0.77 |
1724.TW | T.N.C. Industrial Co Ltd | 0.41 | 0.69 | 0.49 |
1727.TW | Chung Hwa Chemical Industrial Works Ltd | 0.19 | 1.04 | 0.87 |
1776.TW | Headway Advanced Materials Inc | 0.4 | 0.59 | 0.42 |
3645.TW | Taimide Tech Inc | 0.2 | 1.82 | 1.51 |
4722.TW | Qualipoly Chemical Corp | 0.27 | 1.01 | 0.79 |
6581.TW | Taiwan Steel Union Co Ltd | 0.05 | 0.75 | 0.72 |
6582.TW | Shin Foong Specialty and Applied Materials Co Ltd | 0 | 0.98 | 0.97 |
Low | High | |
Unlevered beta | 0.7 | 0.78 |
Relevered beta | 0.7 | 0.78 |
Adjusted relevered beta | 0.8 | 0.85 |
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 1713.TW:
cost_of_equity (7.90%) = risk_free_rate (2.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.8) + 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.