The WACC of Chien Shing Harbour Service Co Ltd (8367.TW) is 9.4%.
| Range | Selected | |
| Cost of equity | 5.10% - 7.80% | 6.45% |
| Tax rate | 16.90% - 18.80% | 17.85% |
| Cost of debt | 4.00% - 22.00% | 13.00% |
| WACC | 3.8% - 15.1% | 9.4% |
| Category | Low | High |
| Long-term bond rate | 2.0% | 2.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.51 | 0.67 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.10% | 7.80% |
| Tax rate | 16.90% | 18.80% |
| Debt/Equity ratio | 2.61 | 2.61 |
| Cost of debt | 4.00% | 22.00% |
| After-tax WACC | 3.8% | 15.1% |
| Selected WACC | 9.4% | |
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 8367.TW:
cost_of_equity (6.45%) = risk_free_rate (2.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.51) + 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.