The WACC of Binh Dinh Water Supply and Sewerage JSC (BDW.VN) is 8.2%.
Range | Selected | |
Cost of equity | 8.1% - 9.7% | 8.9% |
Tax rate | 20.2% - 20.2% | 20.2% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 7.5% - 9.0% | 8.2% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 9.5% | 10.5% |
Adjusted beta | 0.56 | 0.57 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.1% | 9.7% |
Tax rate | 20.2% | 20.2% |
Debt/Equity ratio | 0.13 | 0.13 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 7.5% | 9.0% |
Selected WACC | 8.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
BDW.VN | Binh Dinh Water Supply and Sewerage JSC | 0.13 | 0.36 | 0.33 |
DWS.VN | Dong Thap Water Supply & Urban Environment JSC | 0.29 | 0.11 | 0.09 |
ISH.VN | Idico Srok Phu Mieng Hydropower JSC | 0.01 | 0.32 | 0.32 |
NED.VN | North-West Electric Investment and Development JSC | 0.62 | 0.94 | 0.63 |
PWS.VN | Phu Yen Water Supply and Sewerage JSC | 0.08 | -0.16 | -0.15 |
QPH.VN | Que Phong Hydropower JSC | 0.11 | 0.34 | 0.31 |
Low | High | |
Unlevered beta | 0.31 | 0.32 |
Relevered beta | 0.34 | 0.36 |
Adjusted relevered beta | 0.56 | 0.57 |
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 BDW.VN:
cost_of_equity (8.90%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.56) + 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.