ATM.NZ WACC - Weighted Average Cost of Capital
The WACC of A2 Milk Company Ltd (ATM.NZ) is 8.4%.
| Range | Selected | |
| Cost of equity | 7.2% - 9.7% | 8.45% |
| Tax rate | 34.0% - 35.2% | 34.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.2% - 9.6% | 8.4% |
| Category | Low | High |
| Long-term bond rate | 4.3% | 4.8% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.57 | 0.71 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.2% | 9.7% |
| Tax rate | 34.0% | 35.2% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.2% | 9.6% |
| Selected WACC | 8.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ATM.NZ | A2 Milk Company Ltd | 0.01 | 0.88 | 0.88 |
| 002124.SZ | Tech-bank Food Co Ltd | 0.98 | 0.73 | 0.45 |
| 002458.SZ | Shandong Yisheng Livestock & Poultry Breeding Co Ltd | 0.24 | 0.86 | 0.75 |
| 002505.SZ | Pengdu Agriculture & Animal Husbandry Co Ltd | 1.62 | 1.76 | 0.86 |
| 300761.SZ | Jiangsu Lihua Animal Husbandry Co Ltd | 0.14 | 1.39 | 1.27 |
| GCHE.ME | Gruppa Cherkizovo PAO | 0.41 | 0.07 | 0.06 |
| HVM.AX | Happy Valley Nutrition Ltd | 6.64 | 1.28 | 0.24 |
| NZK.NZ | New Zealand King Salmon Co Ltd | 0.13 | 0.06 | 0.05 |
| SAN.NZ | Sanford Ltd | 0.44 | 0.17 | 0.13 |
| SML.NZ | Synlait Milk Ltd | 1.64 | 0.9 | 0.43 |
| Low | High | |
| Unlevered beta | 0.36 | 0.57 |
| Relevered beta | 0.36 | 0.57 |
| Adjusted relevered beta | 0.57 | 0.71 |
ATM.NZ'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 ATM.NZ:
cost_of_equity (8.45%) = risk_free_rate (4.55%) + equity_risk_premium (5.60%) * adjusted_beta (0.57) + 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.