OV8.SI
Sheng Siong Group Ltd
Price:  
2.08 
SGD
Volume:  
1,785,400
Singapore | Food & Staples Retailing

OV8.SI WACC - Weighted Average Cost of Capital

The WACC of Sheng Siong Group Ltd (OV8.SI) is 6.7%.

The Cost of Equity of Sheng Siong Group Ltd (OV8.SI) is 6.8%.
The Cost of Debt of Sheng Siong Group Ltd (OV8.SI) is 4.25%.

RangeSelected
Cost of equity5.7% - 7.9%6.8%
Tax rate17.6% - 17.9%17.75%
Cost of debt4.0% - 4.5%4.25%
WACC5.6% - 7.8%6.7%
WACC

OV8.SI WACC calculation

CategoryLowHigh
Long-term bond rate2.7%3.2%
Equity market risk premium5.1%6.1%
Adjusted beta0.590.69
Additional risk adjustments0.0%0.5%
Cost of equity5.7%7.9%
Tax rate17.6%17.9%
Debt/Equity ratio
0.040.04
Cost of debt4.0%4.5%
After-tax WACC5.6%7.8%
Selected WACC6.7%

OV8.SI'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 OV8.SI:

cost_of_equity (6.80%) = risk_free_rate (2.95%) + 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.