The WACC of Wing Tai Holdings Ltd (W05.SI) is 7.5%.
| Range | Selected | |
| Cost of equity | 4.70% - 7.20% | 5.95% |
| Tax rate | 13.90% - 27.30% | 20.60% |
| Cost of debt | 4.40% - 19.70% | 12.05% |
| WACC | 4.3% - 10.7% | 7.5% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.4 | 0.58 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.70% | 7.20% |
| Tax rate | 13.90% | 27.30% |
| Debt/Equity ratio | 0.98 | 0.98 |
| Cost of debt | 4.40% | 19.70% |
| After-tax WACC | 4.3% | 10.7% |
| Selected WACC | 7.5% | |
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 W05.SI:
cost_of_equity (5.95%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (0.4) + 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.