The WACC of Shin Heung Energy & Electronics Co Ltd (243840.KQ) is 11.1%.
| Range | Selected | |
| Cost of equity | 20.10% - 27.30% | 23.70% |
| Tax rate | 8.60% - 13.30% | 10.95% |
| Cost of debt | 4.10% - 11.60% | 7.85% |
| WACC | 7.8% - 14.4% | 11.1% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 2.93 | 3.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 20.10% | 27.30% |
| Tax rate | 8.60% | 13.30% |
| Debt/Equity ratio | 3.02 | 3.02 |
| Cost of debt | 4.10% | 11.60% |
| After-tax WACC | 7.8% | 14.4% |
| Selected WACC | 11.1% | |
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 243840.KQ:
cost_of_equity (23.70%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (2.93) + 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.