The WACC of China Star Food Group Ltd (42W.SI) is 10.0%.
| Range | Selected | |
| Cost of equity | 4.90% - 7.30% | 6.10% |
| Tax rate | 38.00% - 38.50% | 38.25% |
| Cost of debt | 4.00% - 93.40% | 48.70% |
| WACC | 4.5% - 15.5% | 10.0% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.43 | 0.58 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.90% | 7.30% |
| Tax rate | 38.00% | 38.50% |
| Debt/Equity ratio | 0.2 | 0.2 |
| Cost of debt | 4.00% | 93.40% |
| After-tax WACC | 4.5% | 15.5% |
| Selected WACC | 10.0% | |
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 42W.SI:
cost_of_equity (6.10%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (0.43) + 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.