The WACC of Hiap Huat Holdings Bhd (HHHCORP.KL) is 3.6%.
| Range | Selected | |
| Cost of equity | 4.60% - 7.90% | 6.25% |
| Tax rate | 35.60% - 40.30% | 37.95% |
| Cost of debt | 4.70% - 5.30% | 5.00% |
| WACC | 3.3% - 3.9% | 3.6% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | 0.12 | 0.4 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.60% | 7.90% |
| Tax rate | 35.60% | 40.30% |
| Debt/Equity ratio | 5.53 | 5.53 |
| Cost of debt | 4.70% | 5.30% |
| After-tax WACC | 3.3% | 3.9% |
| Selected WACC | 3.6% | |
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 HHHCORP.KL:
cost_of_equity (6.25%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.12) + 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.