The WACC of Shin-Etsu Polymer Co Ltd (7970.T) is 6.9%.
Range | Selected | |
Cost of equity | 5.8% - 8.1% | 6.95% |
Tax rate | 27.7% - 28.8% | 28.25% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 5.8% - 8.1% | 6.9% |
Category | Low | High |
Long-term bond rate | 1.4% | 1.9% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.72 | 0.8 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.8% | 8.1% |
Tax rate | 27.7% | 28.8% |
Debt/Equity ratio | 0 | 0 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 5.8% | 8.1% |
Selected WACC | 6.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
7970.T | Shin-Etsu Polymer Co Ltd | 0.81 | 0.73 | 0.46 |
4189.T | KH Neochem Co Ltd | 0.2 | 0.78 | 0.68 |
4216.T | Asahi Yukizai Corp | 0.07 | 1.13 | 1.08 |
4220.T | Riken Technos Corp | 0.2 | 0.83 | 0.72 |
4221.T | Okura Industrial Co Ltd | 0.14 | 0.66 | 0.6 |
4410.T | Harima Chemicals Group Inc | 2.05 | 0.65 | 0.26 |
4968.T | Arakawa Chemical Industries Ltd | 1.84 | 0.99 | 0.43 |
5122.T | Okamoto Industries Inc | 0.04 | 0.52 | 0.51 |
5142.T | Achilles Corp | 0.91 | 0.89 | 0.54 |
7958.T | Tenma Corp | 0.03 | 0.84 | 0.82 |
Low | High | |
Unlevered beta | 0.53 | 0.63 |
Relevered beta | 0.58 | 0.7 |
Adjusted relevered beta | 0.72 | 0.8 |
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 7970.T:
cost_of_equity (6.95%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.72) + 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.