PBP.AX WACC - Weighted Average Cost of Capital
The WACC of Probiotec Ltd (PBP.AX) is 7.7%.
| Range | Selected | |
| Cost of equity | 7.6% - 10.6% | 9.1% |
| Tax rate | 26.2% - 28.3% | 27.25% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 6.4% - 9.1% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.7 | 0.92 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.6% | 10.6% |
| Tax rate | 26.2% | 28.3% |
| Debt/Equity ratio | 0.36 | 0.36 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 6.4% | 9.1% |
| Selected WACC | 7.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PBP.AX | Probiotec Ltd | 0.36 | 0.56 | 0.45 |
| ACR.AX | Acrux Ltd | 0.23 | 0.5 | 0.43 |
| AGH.AX | Althea Group Holdings Ltd | 0.35 | 0.31 | 0.25 |
| CGB.AX | Cann Global Ltd | 0.1 | 1.83 | 1.7 |
| IHL.AX | Incannex Healthcare Ltd | 0 | 0.78 | 0.78 |
| LGP.AX | Little Green Pharma Ltd | 0.15 | 1.1 | 0.99 |
| MXC.AX | MGC Pharmaceuticals Ltd | 0.03 | 0.77 | 0.75 |
| RCE.AX | Recce Pharmaceuticals Ltd | 0.01 | 0.68 | 0.67 |
| RNO.AX | Rhinomed Ltd | 0.75 | 0.41 | 0.26 |
| VLS.AX | Vita Life Sciences Ltd | 0 | 0.09 | 0.09 |
| Low | High | |
| Unlevered beta | 0.44 | 0.7 |
| Relevered beta | 0.55 | 0.88 |
| Adjusted relevered beta | 0.7 | 0.92 |
PBP.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 PBP.AX:
cost_of_equity (9.10%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.7) + 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.