The WACC of Hoa Sen Group (HSG.VN) is 6.5%.
| Range | Selected | |
| Cost of equity | 6.90% - 8.70% | 7.80% |
| Tax rate | 14.60% - 23.30% | 18.95% |
| Cost of debt | 4.40% - 5.90% | 5.15% |
| WACC | 5.8% - 7.3% | 6.5% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.43 | 0.47 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.90% | 8.70% |
| Tax rate | 14.60% | 23.30% |
| Debt/Equity ratio | 0.53 | 0.53 |
| Cost of debt | 4.40% | 5.90% |
| After-tax WACC | 5.8% | 7.3% |
| Selected WACC | 6.5% | |
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 HSG.VN:
cost_of_equity (7.80%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.43) + 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.