The WACC of Hamai Co Ltd (6131.T) is 5.4%.
Range | Selected | |
Cost of equity | 5.0% - 6.9% | 5.95% |
Tax rate | 10.6% - 13.9% | 12.25% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 4.6% - 6.1% | 5.4% |
Category | Low | High |
Long-term bond rate | 1.4% | 1.9% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.51 | 0.56 |
Additional risk adjustments | 0.5% | 1.0% |
Cost of equity | 5.0% | 6.9% |
Tax rate | 10.6% | 13.9% |
Debt/Equity ratio | 0.32 | 0.32 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 4.6% | 6.1% |
Selected WACC | 5.4% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
6131.T | Hamai Co Ltd | 0.44 | 0.03 | 0.02 |
5162.T | Asahi Rubber Inc | 0.7 | 0.25 | 0.16 |
5199.T | Fuji Latex Co Ltd | 2.22 | 0.3 | 0.1 |
5939.T | Otani Kogyo Co Ltd | 0.11 | 0.6 | 0.55 |
5950.T | Japan Power Fastening Co Ltd | 0.61 | 0.38 | 0.25 |
6307.T | Sansei Co Ltd | 0.1 | 0.44 | 0.41 |
6338.T | Takatori Corp | 0.44 | 2 | 1.44 |
6342.T | Taihei Machinery Works Ltd | 0.19 | 0.34 | 0.29 |
6380.T | Oriental Chain Mfg Co Ltd | 0.76 | 0.07 | 0.04 |
6400.T | Fuji Seiki Co Ltd | 1.49 | 0.55 | 0.24 |
Low | High | |
Unlevered beta | 0.2 | 0.27 |
Relevered beta | 0.27 | 0.34 |
Adjusted relevered beta | 0.51 | 0.56 |
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 6131.T:
cost_of_equity (5.95%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.51) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.