The WACC of Union Bank of Taiwan (2838.TW) is 5.8%.
Range | Selected | |
Cost of equity | 6.3% - 8.2% | 7.25% |
Tax rate | 14.9% - 16.2% | 15.55% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.4% - 6.3% | 5.8% |
Category | Low | High |
Long-term bond rate | 2.0% | 2.5% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.71 | 0.73 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.3% | 8.2% |
Tax rate | 14.9% | 16.2% |
Debt/Equity ratio | 0.85 | 0.85 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.4% | 6.3% |
Selected WACC | 5.8% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
2838.TW | Union Bank of Taiwan | 0.85 | 0.45 | 0.26 |
2809.TW | King's Town Bank Co Ltd | 0.15 | 0.29 | 0.26 |
2812.TW | Taichung Commercial Bank Co Ltd | 0.26 | 0.41 | 0.33 |
2834.TW | Taiwan Business Bank Ltd | 0.38 | 0.45 | 0.34 |
2845.TW | Far Eastern International Bank | 0.36 | 0.48 | 0.37 |
2849.TW | EnTie Commercial Bank Ltd | 0.06 | 0.52 | 0.49 |
2890.TW | Sinopac Financial Holdings Co Ltd | 0.75 | 0.54 | 0.33 |
2897.TW | O-Bank Co Ltd | 8.21 | 0.46 | 0.06 |
CUB.NS | City Union Bank Ltd | 0.14 | 0.96 | 0.86 |
KKP.BK | Kiatnakin Phatra Bank PCL | 0.71 | 1.38 | 0.86 |
Low | High | |
Unlevered beta | 0.33 | 0.35 |
Relevered beta | 0.57 | 0.6 |
Adjusted relevered beta | 0.71 | 0.73 |
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 2838.TW:
cost_of_equity (7.25%) = risk_free_rate (2.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.71) + 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.