The WACC of Shinhokoku Steel Corp (5542.T) is 6.5%.
Range | Selected | |
Cost of equity | 5.9% - 8.5% | 7.2% |
Tax rate | 24.9% - 25.3% | 25.1% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 5.4% - 7.6% | 6.5% |
Category | Low | High |
Long-term bond rate | 1.4% | 1.9% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.73 | 0.86 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.9% | 8.5% |
Tax rate | 24.9% | 25.3% |
Debt/Equity ratio | 0.22 | 0.22 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 5.4% | 7.6% |
Selected WACC | 6.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
5542.T | Shinhokoku Steel Corp | 0.22 | 0.65 | 0.56 |
5445.T | Tokyo Tekko Co Ltd | 0.1 | 1.04 | 0.97 |
5451.T | Yodogawa Steel Works Ltd | 0.03 | 0.85 | 0.83 |
5464.T | Mory Industries Inc | 0.06 | 0.98 | 0.93 |
5484.T | Tohoku Steel Co Ltd | 1.06 | 0.45 | 0.25 |
5602.T | Kurimoto Ltd | 0.25 | 0.93 | 0.79 |
5609.T | Nippon Chuzo KK | 0.89 | 0.76 | 0.45 |
5610.T | Daiwa Heavy Industry Co Ltd | 0.73 | -0.28 | -0.18 |
5612.T | Nippon Chutetsukan KK | 1.17 | 1.14 | 0.61 |
5697.T | Sanyu Co Ltd | 0.62 | 0.56 | 0.39 |
Low | High | |
Unlevered beta | 0.52 | 0.68 |
Relevered beta | 0.6 | 0.79 |
Adjusted relevered beta | 0.73 | 0.86 |
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 5542.T:
cost_of_equity (7.20%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.73) + 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.