The WACC of Koken Boring Machine Co Ltd (6297.T) is 5.3%.
Range | Selected | |
Cost of equity | 6.8% - 9.1% | 7.95% |
Tax rate | 17.1% - 28.2% | 22.65% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 4.9% - 5.8% | 5.3% |
Category | Low | High |
Long-term bond rate | 1.4% | 1.9% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.89 | 0.94 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.8% | 9.1% |
Tax rate | 17.1% | 28.2% |
Debt/Equity ratio | 1.27 | 1.27 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 4.9% | 5.8% |
Selected WACC | 5.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
6297.T | Koken Boring Machine Co Ltd | 1.27 | 0.81 | 0.41 |
3440.T | Nisso Pronity Co Ltd | 1.17 | 0.97 | 0.52 |
3441.T | Sanno Co Ltd | 0.91 | 0.78 | 0.46 |
5162.T | Asahi Rubber Inc | 0.65 | 0.25 | 0.17 |
5199.T | Fuji Latex Co Ltd | 2.44 | 0.3 | 0.11 |
5971.T | Kyowakogyosyo Co Ltd | 0 | 0.34 | 0.34 |
6158.T | Waida MFG. Co Ltd | 0.08 | 0.51 | 0.48 |
6267.T | General Packer Co Ltd | 0.05 | 0.45 | 0.43 |
6356.T | Nippon Gear Co Ltd | 0.05 | 0.98 | 0.94 |
6488.T | Yoshitake Inc | 0.11 | 0.67 | 0.61 |
Low | High | |
Unlevered beta | 0.42 | 0.47 |
Relevered beta | 0.84 | 0.91 |
Adjusted relevered beta | 0.89 | 0.94 |
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 6297.T:
cost_of_equity (7.95%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.89) + 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.