The WACC of Elsoft Research Bhd (ELSOFT.KL) is 9.0%.
Range | Selected | |
Cost of equity | 9.6% - 17.7% | 13.65% |
Tax rate | 9.4% - 14.3% | 11.85% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.0% - 11.0% | 9.0% |
Category | Low | High |
Long-term bond rate | 3.8% | 4.3% |
Equity market risk premium | 6.9% | 7.8% |
Adjusted beta | 0.84 | 1.65 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.6% | 17.7% |
Tax rate | 9.4% | 14.3% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.0% | 11.0% |
Selected WACC | 9.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ELSOFT.KL | Elsoft Research Bhd | 0.84 | 1.07 | 0.61 |
224060.KQ | CODI-M Co Ltd | 3.63 | 0.64 | 0.15 |
320000.KQ | WinTec Co Ltd | 0.11 | 0.05 | 0.05 |
6596.T | Tsukubaseiko Co Ltd | 0.11 | -0.02 | -0.02 |
AEMULUS.KL | Aemulus Holdings Bhd | 0.22 | 1.81 | 1.51 |
FPGROUP.KL | Foundpac Group Bhd | 0.02 | 1.62 | 1.6 |
JFTECH.KL | JF Technology Bhd | 0.01 | 1.89 | 1.88 |
KEYASIC.KL | Key ASIC Bhd | 0.01 | -0.59 | -0.59 |
MI.KL | MI Technovation Bhd | 0.03 | 1.71 | 1.67 |
MQTECH.KL | MQ Technology Bhd | 0.01 | 0.57 | 0.57 |
TURIYA.KL | Turiya Bhd | 0.52 | 1.05 | 0.71 |
Low | High | |
Unlevered beta | 0.57 | 0.71 |
Relevered beta | 0.76 | 1.97 |
Adjusted relevered beta | 0.84 | 1.65 |
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 ELSOFT.KL:
cost_of_equity (13.65%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.84) + 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.