The WACC of United Overseas Bank Ltd (U11.SI) is 7.5%.
Range | Selected | |
Cost of equity | 8.4% - 11.3% | 9.85% |
Tax rate | 16.9% - 17.2% | 17.05% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.7% - 8.4% | 7.5% |
Category | Low | High |
Long-term bond rate | 2.7% | 3.2% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 1.11 | 1.24 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.4% | 11.3% |
Tax rate | 16.9% | 17.2% |
Debt/Equity ratio | 0.69 | 0.69 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.7% | 8.4% |
Selected WACC | 7.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
U11.SI | United Overseas Bank Ltd | 0.69 | 1.29 | 0.82 |
024110.KS | Industrial Bank of Korea | 14.25 | 0.64 | 0.05 |
055550.KS | Shinhan Financial Group Co Ltd | 4.39 | 0.62 | 0.13 |
1060.SR | Saudi British Bank SJSC | 0.44 | 1.37 | 1 |
1080.SR | Arab National Bank | 0.09 | 1.02 | 0.95 |
AMAR.JK | Bank Amar Indonesia PT | 0 | 0.64 | 0.63 |
BBHI.JK | Bank Harda Internasional Tbk PT | 0.01 | 0.94 | 0.93 |
D05.SI | DBS Group Holdings Ltd | 0.53 | 1.49 | 1.03 |
O39.SI | Oversea-Chinese Banking Corporation Ltd | 0.42 | 1.09 | 0.81 |
PRMB.ME | AKB Primor'ye PAO | 0.04 | 0.04 | 0.04 |
Low | High | |
Unlevered beta | 0.74 | 0.86 |
Relevered beta | 1.16 | 1.36 |
Adjusted relevered beta | 1.11 | 1.24 |
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 U11.SI:
cost_of_equity (9.85%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * 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.