The WACC of Adventa Bhd (ADVENTA.KL) is 10.9%.
| Range | Selected | |
| Cost of equity | 5.40% - 9.20% | 7.30% |
| Tax rate | 7.40% - 9.90% | 8.65% |
| Cost of debt | 20.80% - 35.20% | 28.00% |
| WACC | 8.2% - 13.7% | 10.9% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | -0.12 | 0.25 |
| Additional risk adjustments | 2.5% | 3.0% |
| Cost of equity | 5.40% | 9.20% |
| Tax rate | 7.40% | 9.90% |
| Debt/Equity ratio | 0.24 | 0.24 |
| Cost of debt | 20.80% | 35.20% |
| After-tax WACC | 8.2% | 13.7% |
| Selected WACC | 10.9% | |
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 ADVENTA.KL:
cost_of_equity (7.30%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (-0.12) + risk_adjustments (2.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.