The WACC of Advance Synergy Bhd (ASB.KL) is 7.0%.
Range | Selected | |
Cost of equity | 6.4% - 9.0% | 7.7% |
Tax rate | 6.6% - 12.3% | 9.45% |
Cost of debt | 5.8% - 7.0% | 6.4% |
WACC | 6.0% - 8.0% | 7.0% |
Category | Low | High |
Long-term bond rate | 3.8% | 4.3% |
Equity market risk premium | 6.9% | 7.8% |
Adjusted beta | 0.38 | 0.53 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.4% | 9.0% |
Tax rate | 6.6% | 12.3% |
Debt/Equity ratio | 0.56 | 0.56 |
Cost of debt | 5.8% | 7.0% |
After-tax WACC | 6.0% | 8.0% |
Selected WACC | 7.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ASB.KL | Advance Synergy Bhd | 0.56 | 1.58 | 1.04 |
ASDION.KL | Asdion Bhd | 0 | 0.41 | 0.41 |
BJCORP.KL | Berjaya Corporation Bhd | 4.77 | 0.19 | 0.03 |
HID.VN | HALCOM VIETNAM JSC | 2.84 | 0.08 | 0.02 |
HPPHB.KL | HPP Holdings Bhd | 0.11 | -0.57 | -0.51 |
INCKEN.KL | Inch Kenneth Kajang Rubber PLC | 0.01 | 0.4 | 0.4 |
KAMDAR.KL | Kamdar Group (M) Bhd | 1.17 | -0.28 | -0.14 |
KFIMA.KL | Kumpulan Fima Bhd | 0.56 | 0.86 | 0.57 |
TEXCHEM.KL | Texchem Resources Bhd | 3.87 | 0.31 | 0.07 |
WARISAN.KL | Warisan TC Holdings Bhd | 3.79 | 0.23 | 0.05 |
Low | High | |
Unlevered beta | 0.04 | 0.2 |
Relevered beta | 0.07 | 0.3 |
Adjusted relevered beta | 0.38 | 0.53 |
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 ASB.KL:
cost_of_equity (7.70%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.38) + 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.