6901.T WACC - Weighted Average Cost of Capital
The WACC of Sawafuji Electric Co Ltd (6901.T) is 4.8%.
| Range | Selected | |
| Cost of equity | 6.0% - 8.4% | 7.2% |
| Tax rate | 31.8% - 32.2% | 32% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 4.2% - 5.5% | 4.8% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.75 | 0.84 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.0% | 8.4% |
| Tax rate | 31.8% | 32.2% |
| Debt/Equity ratio | 1.22 | 1.22 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 4.2% | 5.5% |
| Selected WACC | 4.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 6901.T | Sawafuji Electric Co Ltd | 1.22 | 0.73 | 0.4 |
| 5659.T | Nippon Seisen Co Ltd | 0.01 | 0.89 | 0.89 |
| 5816.T | Onamba Co Ltd | 0.21 | 0.7 | 0.61 |
| 5817.T | JMACS Japan Co Ltd | 1.54 | 0.48 | 0.23 |
| 5821.T | Hirakawa Hewtech Corp | 0.11 | 0.95 | 0.89 |
| 5983.T | Iwabuchi Corp | 0.1 | 0.21 | 0.2 |
| 6513.T | Origin Co Ltd | 0.36 | 0.46 | 0.37 |
| 6647.T | Morio Denki Co Ltd | 0.6 | 0.4 | 0.29 |
| 6748.T | Seiwa Electric Mfg. Co Ltd | 0.74 | 0.66 | 0.44 |
| 6993.T | Daikokuya Holdings Co Ltd | 1.48 | 0.39 | 0.19 |
| Low | High | |
| Unlevered beta | 0.34 | 0.41 |
| Relevered beta | 0.63 | 0.76 |
| Adjusted relevered beta | 0.75 | 0.84 |
6901.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 6901.T:
cost_of_equity (7.20%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.75) + 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.