The WACC of Tsukishima Kikai Co Ltd (6332.T) is 7.6%.
Range | Selected | |
Cost of equity | 7.5% - 10.0% | 8.75% |
Tax rate | 28.8% - 35.2% | 32% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 6.6% - 8.6% | 7.6% |
Category | Low | High |
Long-term bond rate | 1.4% | 1.9% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.99 | 1.06 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.5% | 10.0% |
Tax rate | 28.8% | 35.2% |
Debt/Equity ratio | 0.24 | 0.24 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 6.6% | 8.6% |
Selected WACC | 7.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
6332.T | Tsukishima Kikai Co Ltd | 0.24 | 0.74 | 0.63 |
5186.T | Nitta Corp | 0 | 0.76 | 0.76 |
5195.T | Bando Chemical Industries Ltd | 0.09 | 1.07 | 1 |
5331.T | Noritake Co Ltd | 0.06 | 1.08 | 1.04 |
6104.T | Shibaura Machine Co Ltd | 0.12 | 0.96 | 0.88 |
6339.T | Sintokogio Ltd | 1.08 | 0.96 | 0.54 |
6340.T | Shibuya Corp | 0.05 | 0.89 | 0.86 |
6349.T | Komori Corp | 0.13 | 1.18 | 1.08 |
6368.T | Organo Corp | 0.05 | 1.41 | 1.36 |
6498.T | Kitz Corp | 0.35 | 1.02 | 0.82 |
Low | High | |
Unlevered beta | 0.84 | 0.93 |
Relevered beta | 0.99 | 1.09 |
Adjusted relevered beta | 0.99 | 1.06 |
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 6332.T:
cost_of_equity (8.75%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.99) + 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.