estimated wacc of commodity trading companies
DESCRIPTION
Estimation of WACC of global trading companiesTRANSCRIPT
Sheet2 (2)
Estimate of Weighted Average Cost of Capital of Listed Competitors$ '000Dec 31 2013Dec 31 2013Dec 31 2013Dec 31 2013 Dec 31 2013Dec 31 2013Noble Group Limited (SGX)Olam International Limited (SGX)Wilmar International Ltd (SGX) Bunge Limited (NYSE)ADM (NYSE)Glencore International (London)Risk free rate (10 year G Sec yield) 2.37%2.37%2.37%2.42%2.42%2.42%Avg Market Risk Premium (From Pablos market risk premium survey 2013)5.00%5.00%5.00%5.70%5.70%5.50%Current Beta for the stock (from Reuters)1.611.520.870.910.851.21Cost of Equity10.42%9.97%6.72%7.61%7.27%9.08%Marginal Cost of Debt4.34%6.40%3.80%5.01%4.13%4.13%Gearing (from 2013 Annual report)1.192.250.670.410.3220.825Tax rate17%17%17%40%40%21%WACC6.71%6.74%5.29%6.28%6.10%6.45%WACC indicated in Annual Report 20136.70%
Assumptions
Risk free rate is taken as 10 years G Sec rate as on September 2014
Average risk premium is taken from Pablos survey of risk premium used by Companies across the globe for year 2013
Beta is taken from reuters as on Sep 2014
Cost of equity is calculated by using Capital Asset Pricing Method
Cost of debt is estimated based on market price of listed bonds wherever available. In other cases, average interest rate of recent fixed rate borrowings of the Company is taken as marginal cost of debt. Historical cost debt is calculated for indicative purpose
Gearing is taken by considering long term debt and Share holders equity values available from the annual reports of the Companies
All figures are in US dollars
Historical Cost of Debt Noble Group Limited (SGX)Olam International Limited (SGX)Wilmar International Ltd (SGX) Bunge Limited (NYSE)ADM (NYSE)Glencore International (London)Finance expenses (from 2013 Annual report)3994935475545572343630004130001781000Gross Debt (from 2013 Annual report)61480198848238261955749180000686400055185000Historical Cost of Debt 6.50%6.19%2.13%3.95%6.02%3.23%
Marginal Cost of Debt
Interest rate of debt raised during 2013Noble Group Limited (SGX)2 Y Medium Term note4.50%1 Y Medium Term note4.22%3 Y Medium Term note4.30%Marginal cost of debt (Avg)4.34%
Interest rate of debt raised during 2013Wilmar International Ltd (SGX) 5 Y Medium term note3.50%7 Year Medium term note4.10%Marginal cost of debt3.80%
Olam International Limited (SGX)Issue of 2018 bonds - listed in SGX6.75%2018 bonds trading at ex-interest1.055Marginal cost of debt (Avg)6.40%
Interest rate of debt raised during 2013Bunge Limited (NYSE)Revolving credit arrangementL + 1.3625Revolving credit arrangementL + 1.225Revolving credit arrangementL + 1.225Price of trading bond in FF stock exchange - Bunge LTD.FIN 05/15102.629Less: Accrued interest0.82Ex interest price101.80Coupon rate5.1Marginal cost of debt5.01%
Interest rate of debt raised during 2012/2013ADM (NYSE)Debentures4.02%Shor term borrowings4.24%Marginal cost of debt4.13%
Interest rate of debt raised during 2012/2013Glencore International (London)Revolving facilityL +.855 year US bond2.50%10- year US bond4.13%
Finance ExpensesBank loans200836272203523179Overdrafts17695Bonds22982120576Notes17567598545Interest rate swaps30127Others385353928Total Finance expenses3994935475545572343630004130001781000
Gross DebtBank loans28667364778591103673166607000Pre shipment loan9984205Revolving credit facilities4000005702000Bill discounts/trust receipts5410674Bank Overdrafts2611471630137030003520005619000LOC obligation4470000Finance leases259668393000Bonds37244318099742236000Debentures4669000US Commercial Paper1645000Term Notes290884019725602703583607000184300032983000Gross Debt61480198848238261955749180000686400055185000Share holders equity516691138237281588682198570002019400053149000
Treasury yield curve rates from US department of treasuryDate5 Yr7 Yr10 Yr20 Yr30 Yr2/9/141.692.112.422.913.173/9/141.692.112.412.93.154/9/141.712.142.452.953.215/9/141.692.142.462.973.238/9/141.722.162.482.973.23
Treasury yield curve rates from Monetory Authority of SingaporeTREASURY BILLSBONDS1-YEAR2-YEAR5-YEAR10-YEARISSUE CODEBY14100SNY01100FNX09100WNY09100HCOUPON RATE3.75%2.50%3.00%MATURITY DATE2-May-151-Sep-161-Jun-191-Sep-24YIELDPRICEYIELDPRICEYIELDPRICEYIELD3-Sep-140.34106.410.52105.121.38105.712.364-Sep-140.34106.410.51105.121.38105.922.335-Sep-140.34106.390.52105.021.4105.792.358-Sep-140.34106.390.5105.11.38105.882.349-Sep-140.34106.350.52104.921.42105.52.3810-Sep-140.34106.310.53104.61.49104.922.44AssumptionsRisk free rate is taken as 10 years US treasury bond rate
Average risk premium is taken from Pablos survey of risk premium used by Companies across the globe for year 2013
Beta is taken from reuters as on Sep 2014
Cost of equity is calculated by using Capital Asset Pricing Method
Cost of debt is estimated based on market price of listed bonds wherever available. In other cases, average interest rate of recent fixed rate borrowings of the Company is taken as marginal cost of debt. Historical cost debt is calculated for historical purpose
Gearing is taken by considering long term debt and Share holders equity values available from the annual reports of the Companies
All figures are denominated in US dollars
Sheet2
Estimate of Weighted Average Cost of Capital of Listed Competitors$ '000Dec 31 2013Dec 31 2013Dec 31 2013Dec 31 2013 Dec 31 2013Dec 31 2013Noble Group Limited (SGX)Olam International Limited (SGX)Wilmar International Ltd (SGX) Bunge Limited (NYSE)ADM (NYSE)Glencore International (London)Risk free rate (10 year G Sec yield) 2.37%2.37%2.37%2.42%2.42%2.42%Avg Market Risk Premium (From Pablos market risk premium survey 2013)5.00%5.00%5.00%5.70%5.70%5.50%Current Beta for the stock (from Reuters)1.611.520.870.910.851.21Cost of Equity10.42%9.97%6.72%7.61%7.27%9.08%Marginal Cost of Debt4.34%6.40%3.80%5.01%4.13%4.13%Gearing (from 2013 Annual report)1.192.250.670.410.3220.825Tax rate17%17%17%40%40%21%WACC6.71%6.74%5.29%6.28%6.10%6.45%WACC indicated in Annual Report 20136.70%
Historical Cost of Debt Noble Group Limited (SGX)Olam International Limited (SGX)Wilmar International Ltd (SGX) Bunge Limited (NYSE)ADM (NYSE)Glencore International (London)Finance expenses (from 2013 Annual report)3994935475545572343630004130001781000Gross Debt (from 2013 Annual report)61480198848238261955749180000686400055185000Historical Cost of Debt 6.50%6.19%2.13%3.95%6.02%3.23%
Finance ExpensesBank loans200836272203523179Overdrafts17695Bonds22982120576Notes17567598545Interest rate swaps30127Others385353928Total Finance expenses3994935475545572343630004130001781000
Gross DebtBank loans28667364778591103673166607000Pre shipment loan9984205Revolving credit facilities4000005702000Bill discounts/trust receipts5410674Bank Overdrafts2611471630137030003520005619000LOC obligation4470000Finance leases259668393000Bonds37244318099742236000Debentures4669000US Commercial Paper1645000Term Notes290884019725602703583607000184300032983000Gross Debt61480198848238261955749180000686400055185000Share holders equity516691138237281588682198570002019400053149000
Marginal Cost of Debt
Interest rate of debt raised during 2013Noble Group Limited (SGX)2 Y Medium Term note4.50%1 Y Medium Term note4.22%3 Y Medium Term note4.30%Marginal cost of debt (Avg)4.34%
Interest rate of debt raised during 2013Wilmar International Ltd (SGX) 5 Y Medium term note3.50%7 Year Medium term note4.10%Marginal cost of debt3.80%
Olam International Limited (SGX)Issue of 2018 bonds - listed in SGX6.75%2018 bonds trading at ex-interest1.055Marginal cost of debt (Avg)6.40%
Interest rate of debt raised during 2013Bunge Limited (NYSE)Revolving credit arrangementL + 1.3625Revolving credit arrangementL + 1.225Revolving credit arrangementL + 1.225Price of trading bond in FF stock exchange - Bunge LTD.FIN 05/15102.629Less: Accrued interest0.82Ex interest price101.80Coupon rate5.1Marginal cost of debt5.01%
Interest rate of debt raised during 2012/2013ADM (NYSE)Debentures4.02%Shor term borrowings4.24%Marginal cost of debt4.13%
Interest rate of debt raised during 2012/2013Glencore International (London)Revolving facilityL +.855 year US bond2.50%10- year US bond4.13%
Treasury yield curve rates from US department of treasuryDate5 Yr7 Yr10 Yr20 Yr30 Yr2/9/141.692.112.422.913.173/9/141.692.112.412.93.154/9/141.712.142.452.953.215/9/141.692.142.462.973.238/9/141.722.162.482.973.23
Treasury yield curve rates from Monetory Authority of SingaporeTREASURY BILLSBONDS1-YEAR2-YEAR5-YEAR10-YEARISSUE CODEBY14100SNY01100FNX09100WNY09100HCOUPON RATE3.75%2.50%3.00%MATURITY DATE2-May-151-Sep-161-Jun-191-Sep-24YIELDPRICEYIELDPRICEYIELDPRICEYIELD3-Sep-140.34106.410.52105.121.38105.712.364-Sep-140.34106.410.51105.121.38105.922.335-Sep-140.34106.390.52105.021.4105.792.358-Sep-140.34106.390.5105.11.38105.882.349-Sep-140.34106.350.52104.921.42105.52.3810-Sep-140.34106.310.53104.61.49104.922.44AssumptionsRisk free rate is taken as 10 years US treasury bond rate
Average risk premium is taken from Pablos survey of risk premium used by Companies across the globe for year 2013
Beta is taken from reuters as on Sep 2014
Cost of equity is calculated by using Capital Asset Pricing Method
Cost of debt is estimated based on market price of listed bonds wherever available. In other cases, average interest rate of recent fixed rate borrowings of the Company is taken as marginal cost of debt. Historical cost debt is calculated for historical purpose
Gearing is taken by considering long term debt and Share holders equity values available from the annual reports of the Companies
All figures are denominated in US dollars
Sheet1From Yahoo financeDec 31 2013Dec 31 2013Dec 31 2013Noble Group Limited (SGX)Olam International Limited (SGX)Bunge Limited (NYSE)Forward P/E 15.760212.3811.99Cost of equity6.35%8.08%8.34%TREASURY BILLSBONDS1-YEAR2-YEAR5-YEAR10-YEAR15-YEAR20-YEAR30-YEARDebt to Equity1.09712.210.837ISSUE CODEBY14100SNY01100FNX09100WNY09100HNY14100ENZ13100VNA12100NWACC6.43%6.78%6.34%COUPON RATE3.75%2.50%3.00%2.88%3.38%2.75%MATURITY DATE2-May-151-Sep-161-Jun-191-Sep-241-Jul-291-Sep-331-Apr-42YIELDPRICEYIELDPRICEYIELDPRICEYIELDPRICEYIELDPRICEYIELDPRICEYIELD3-Sep-140.34106.410.52105.121.38105.712.36102.022.71108.282.8196.952.914-Sep-140.34106.410.51105.121.38105.922.33102.452.67108.552.7997.312.895-Sep-140.34106.390.52105.021.4105.792.35102.192.69108.142.8296.822.928-Sep-140.34106.390.5105.11.38105.882.34102.332.68108.272.8196.912.919-Sep-140.34106.350.52104.921.42105.52.38101.692.74107.622.8596.062.9610-Sep-140.34106.310.53104.61.49104.922.44100.872.8106.732.91953.02