The WACC of China Steel Corp (2002.TW) is 5.5%.
Range | Selected | |
Cost of equity | 5.6% - 7.3% | 6.45% |
Tax rate | 18.4% - 20.1% | 19.25% |
Cost of debt | 4.0% - 7.0% | 5.5% |
WACC | 4.5% - 6.5% | 5.5% |
Category | Low | High |
Long-term bond rate | 2.0% | 2.5% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.59 | 0.61 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.6% | 7.3% |
Tax rate | 18.4% | 20.1% |
Debt/Equity ratio | 0.9 | 0.9 |
Cost of debt | 4.0% | 7.0% |
After-tax WACC | 4.5% | 6.5% |
Selected WACC | 5.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
2002.TW | China Steel Corp | 0.9 | 0.12 | 0.07 |
2006.TW | Tung Ho Steel Enterprise Corp | 0.26 | 0.3 | 0.25 |
2014.TW | Chung Hung Steel Corp | 0.72 | 0.86 | 0.54 |
2015.TW | Feng Hsin Steel Co Ltd | 0.05 | 0.35 | 0.34 |
2017.TW | Quintain Steel Co Ltd | 1.31 | 0.48 | 0.23 |
2020.TW | Mayer Steel Pipe Corp | 0.45 | 0.31 | 0.23 |
2023.TW | Yieh Phui Enterprise Co Ltd | 1.83 | 0.01 | 0 |
2027.TW | Ta Chen Stainless Pipe Co Ltd | 0.56 | 0.25 | 0.17 |
2031.TW | Hsin Kuang Steel Co Ltd | 1.17 | 0.45 | 0.23 |
2069.TW | Yuen Chang Stainless Steel Co Ltd | 1.88 | 0.63 | 0.25 |
Low | High | |
Unlevered beta | 0.23 | 0.24 |
Relevered beta | 0.39 | 0.42 |
Adjusted relevered beta | 0.59 | 0.61 |
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 2002.TW:
cost_of_equity (6.45%) = risk_free_rate (2.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.59) + 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.