4506.T WACC - Weighted Average Cost of Capital
The WACC of Sumitomo Dainippon Pharma Co Ltd (4506.T) is 5.0%.
| Range | Selected | |
| Cost of equity | 5.2% - 7.4% | 6.3% |
| Tax rate | 27.7% - 30.6% | 29.15% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 4.0% - 6.1% | 5.0% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.62 | 0.71 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.2% | 7.4% |
| Tax rate | 27.7% | 30.6% |
| Debt/Equity ratio | 1.12 | 1.12 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 4.0% | 6.1% |
| Selected WACC | 5.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 4506.T | Sumitomo Dainippon Pharma Co Ltd | 1.12 | 1.45 | 0.82 |
| 4516.T | Nippon Shinyaku Co Ltd | 0.01 | 0.64 | 0.64 |
| 4521.T | Kaken Pharmaceutical Co Ltd | 0.02 | 0.28 | 0.28 |
| 4528.T | Ono Pharmaceutical Co Ltd | 0.01 | 0.34 | 0.34 |
| 4530.T | Hisamitsu Pharmaceutical Co Inc | 0.01 | 0.2 | 0.2 |
| 4536.T | Santen Pharmaceutical Co Ltd | 0.07 | 0.49 | 0.47 |
| 4539.T | Nippon Chemiphar Co Ltd | 2.61 | 0.2 | 0.07 |
| 4541.T | Nichi-Iko Pharmaceutical Co Ltd | 6.6 | 0.32 | 0.06 |
| 4577.T | Daito Pharmaceutical Co Ltd | 0.27 | 0.36 | 0.3 |
| 4581.T | Taisho Pharmaceutical Holdings Co Ltd | 0 | -0.18 | -0.18 |
| Low | High | |
| Unlevered beta | 0.24 | 0.32 |
| Relevered beta | 0.43 | 0.57 |
| Adjusted relevered beta | 0.62 | 0.71 |
4506.T's CAPM model and how its cost of Equity is calculated
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 4506.T:
cost_of_equity (6.30%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.62) + 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.