DRBHCOM.KL WACC - Weighted Average Cost of Capital

The WACC of DRB-Hicom Bhd (DRBHCOM.KL) is 9.4%.

The Cost of Equity of DRB-Hicom Bhd (DRBHCOM.KL) is 26.80%.

The Cost of Debt of DRB-Hicom Bhd (DRBHCOM.KL) is 6.95%.

	Range	Selected
Cost of equity	17.30% - 36.30%	26.80%
Tax rate	16.60% - 23.50%	20.05%
Cost of debt	4.90% - 9.00%	6.95%
WACC	6.5% - 12.3%	9.4%

WACC

DRBHCOM.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	1.98	4.01

Additional risk adjustments	0.0%	0.5%
Cost of equity	17.30%	36.30%

Tax rate	16.60%	23.50%
Debt/Equity ratio	4.45	4.45
Cost of debt	4.90%	9.00%

After-tax WACC	6.5%	12.3%


Selected WACC	9.4%

DRBHCOM.KL's CAPM model and how its cost of Equity is calculated

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 DRBHCOM.KL:

cost_of_equity (26.80%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (1.98) + 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.