The WACC of UOB-Kay Hian Holdings Ltd (U10.SI) is 5.7%.
Range | Selected | |
Cost of equity | 5.6% - 7.4% | 6.5% |
Tax rate | 11.9% - 12.4% | 12.15% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 5.0% - 6.4% | 5.7% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.57 | 0.6 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.6% | 7.4% |
Tax rate | 11.9% | 12.4% |
Debt/Equity ratio | 0.41 | 0.41 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 5.0% | 6.4% |
Selected WACC | 5.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
U10.SI | UOB-Kay Hian Holdings Ltd | 0.41 | 0.57 | 0.42 |
030610.KS | Kyobo Securities Co Ltd | 5.5 | 0.62 | 0.11 |
1031.HK | Kingston Financial Group Ltd | 1.21 | 0.58 | 0.28 |
1476.HK | Hengtai Securities Co Ltd | 2.99 | 1.52 | 0.42 |
2855.TW | President Securities Corp | 1.78 | 0.68 | 0.27 |
6005.TW | Capital Securities Corp | 2.51 | 0.42 | 0.13 |
7177.T | GMO Financial Holdings Inc | 2.62 | 0.88 | 0.27 |
8609.T | Okasan Securities Group Inc | 3.42 | 1.26 | 0.32 |
8616.T | Tokai Tokyo Financial Holdings Inc | 5.43 | 1.07 | 0.19 |
JMFINANCIL.NS | JM Financial Ltd | 1.02 | 2.09 | 1.1 |
Low | High | |
Unlevered beta | 0.27 | 0.3 |
Relevered beta | 0.36 | 0.4 |
Adjusted relevered beta | 0.57 | 0.6 |
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 U10.SI:
cost_of_equity (6.50%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (0.57) + 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.