The WACC of Hai-O Enterprise Bhd (HAIO.KL) is 10.1%.
| Range | Selected | |
| Cost of equity | 8.90% - 11.20% | 10.05% |
| Tax rate | 24.50% - 25.00% | 24.75% |
| Cost of debt | 4.90% - 35.40% | 20.15% |
| WACC | 8.8% - 11.3% | 10.1% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.9% | 6.9% |
| Adjusted beta | 0.78 | 0.86 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.90% | 11.20% |
| Tax rate | 24.50% | 25.00% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 4.90% | 35.40% |
| After-tax WACC | 8.8% | 11.3% |
| Selected WACC | 10.1% | |
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 HAIO.KL:
cost_of_equity (10.05%) = risk_free_rate (4.45%) + equity_risk_premium (6.40%) * adjusted_beta (0.78) + 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.