The WACC of Hokkoku Bank Ltd (8363.T) is 3.7%.
Range | Selected | |
Cost of equity | 6.0% - 15.5% | 10.75% |
Tax rate | 33.2% - 35.1% | 34.15% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 3.5% - 3.9% | 3.7% |
Category | Low | High |
Long-term bond rate | 0.8% | 1.2% |
Equity market risk premium | 5.4% | 6.4% |
Adjusted beta | 0.97 | 2.13 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.0% | 15.5% |
Tax rate | 33.2% | 35.1% |
Debt/Equity ratio | 18.19 | 18.19 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 3.5% | 3.9% |
Selected WACC | 3.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
8363.T | Hokkoku Bank Ltd | 18.19 | 0.85 | 0.06 |
8336.T | Musashino Bank Ltd | 0.61 | 1.22 | 0.87 |
8346.T | Toho Bank Ltd | 2.53 | 1.12 | 0.42 |
8356.T | Juroku Bank Ltd | 6.88 | 1.18 | 0.21 |
8367.T | Nanto Bank Ltd | 4.22 | 1.24 | 0.33 |
8386.T | Hyakujushi Bank Ltd | 4.79 | 1.16 | 0.28 |
8388.T | Awa Bank Ltd | 1.36 | 1.03 | 0.54 |
8397.T | Bank of Okinawa Ltd | 2.21 | 0.9 | 0.37 |
8522.T | Bank of Nagoya Ltd | 2.66 | 1.52 | 0.55 |
8600.T | Tomony Holdings Inc | 1.4 | 0.87 | 0.45 |
Low | High | |
Unlevered beta | 0.35 | 0.43 |
Relevered beta | 0.96 | 2.69 |
Adjusted relevered beta | 0.97 | 2.13 |
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 8363.T:
cost_of_equity (10.75%) = risk_free_rate (1.00%) + equity_risk_premium (5.90%) * adjusted_beta (0.97) + 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.