The WACC of Astral Asia Bhd (AASIA.KL) is 6.0%.
| Range | Selected | |
| Cost of equity | 6.20% - 8.20% | 7.20% |
| Tax rate | 25.40% - 45.50% | 35.45% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 5.2% - 6.8% | 6.0% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | 0.36 | 0.43 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.20% | 8.20% |
| Tax rate | 25.40% | 45.50% |
| Debt/Equity ratio | 0.48 | 0.48 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 5.2% | 6.8% |
| Selected WACC | 6.0% | |
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 AASIA.KL:
cost_of_equity (7.20%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.36) + 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.