The WACC of Hung Poo Real Estate Development Co Ltd (2536.TW) is 8.0%.
Range | Selected | |
Cost of equity | 5.9% - 9.5% | 7.7% |
Tax rate | 14.6% - 41.7% | 28.15% |
Cost of debt | 4.0% - 22.0% | 13% |
WACC | 4.1% - 11.9% | 8.0% |
Category | Low | High |
Long-term bond rate | 2.0% | 2.5% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.65 | 0.92 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.9% | 9.5% |
Tax rate | 14.6% | 41.7% |
Debt/Equity ratio | 2.45 | 2.45 |
Cost of debt | 4.0% | 22.0% |
After-tax WACC | 4.1% | 11.9% |
Selected WACC | 8.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
2536.TW | Hung Poo Real Estate Development Co Ltd | 2.45 | 0.47 | 0.16 |
160.HK | Hon Kwok Land Investment Co Ltd | 8.5 | 0.37 | 0.05 |
2841.TW | Taiwan Land Development Corp | 6.51 | 1.04 | 0.16 |
3056.TW | ZongTai Real Estate Development Co Ltd | 0.51 | 0.58 | 0.41 |
3266.TW | Sunty Development Co Ltd | 0.63 | 0.49 | 0.32 |
3688.HK | Top Spring International Holdings Ltd | 14.1 | 1.05 | 0.08 |
5531.TW | Shining Building Business Co Ltd | 2.35 | 0.45 | 0.16 |
5533.TW | Founding Construction Development Co Ltd | 0.35 | 0.39 | 0.3 |
6177.TW | Da-Li Development Co Ltd | 1.02 | 0.53 | 0.29 |
9946.TW | San Far Property Ltd | 1.28 | 0.75 | 0.37 |
Low | High | |
Unlevered beta | 0.16 | 0.29 |
Relevered beta | 0.48 | 0.88 |
Adjusted relevered beta | 0.65 | 0.92 |
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 2536.TW:
cost_of_equity (7.70%) = risk_free_rate (2.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.65) + 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.