GAS.AX WACC - Weighted Average Cost of Capital
The WACC of State Gas Ltd (GAS.AX) is 7.7%.
| Range | Selected | |
| Cost of equity | 7.0% - 9.9% | 8.45% |
| Tax rate | 30.0% - 30.0% | 30% |
| Cost of debt | 4.6% - 4.6% | 4.6% |
| WACC | 6.4% - 8.9% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.59 | 0.8 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.0% | 9.9% |
| Tax rate | 30.0% | 30.0% |
| Debt/Equity ratio | 0.18 | 0.18 |
| Cost of debt | 4.6% | 4.6% |
| After-tax WACC | 6.4% | 8.9% |
| Selected WACC | 7.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| GAS.AX | State Gas Ltd | 0.18 | 3.31 | 2.93 |
| AJQ.AX | Armour Energy Ltd | 3.44 | -1.75 | -0.51 |
| BLU.AX | Blue Energy Ltd | 0.01 | 1.12 | 1.12 |
| BRU.AX | Buru Energy Ltd | 0.03 | 0.81 | 0.79 |
| COI.AX | Comet Ridge Ltd | 0.05 | 0.8 | 0.78 |
| EEG.AX | Empire Energy Group Ltd | 0.02 | 0.16 | 0.15 |
| IVZ.AX | Invictus Energy Ltd | 0 | 1.45 | 1.45 |
| KKO.AX | Kinetiko Energy Ltd | 0.02 | 0.53 | 0.53 |
| NGY.AX | Nuenergy Gas Ltd | 0.14 | 0.18 | 0.16 |
| TDO.AX | 3D Oil Ltd | 0 | 0.46 | 0.46 |
| WEL.AX | Winchester Energy Ltd | 0.13 | -0.78 | -0.71 |
| Low | High | |
| Unlevered beta | 0.46 | 0.78 |
| Relevered beta | 0.39 | 0.7 |
| Adjusted relevered beta | 0.59 | 0.8 |
GAS.AX'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 GAS.AX:
cost_of_equity (8.45%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.59) + 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.