The WACC of Saigon Hanoi Securities JSC (SHS.VN) is 13.6%.
| Range | Selected | |
| Cost of equity | 13.30% - 17.20% | 15.25% |
| Tax rate | 18.20% - 18.80% | 18.50% |
| Cost of debt | 4.00% - 6.10% | 5.05% |
| WACC | 11.8% - 15.4% | 13.6% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 1.11 | 1.28 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 13.30% | 17.20% |
| Tax rate | 18.20% | 18.80% |
| Debt/Equity ratio | 0.18 | 0.18 |
| Cost of debt | 4.00% | 6.10% |
| After-tax WACC | 11.8% | 15.4% |
| Selected WACC | 13.6% | |
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 SHS.VN:
cost_of_equity (15.25%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (1.11) + 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.