HPPHB.KL WACC - Weighted Average Cost of Capital

The WACC of HPP Holdings Bhd (HPPHB.KL) is 8.1%.

The Cost of Equity of HPP Holdings Bhd (HPPHB.KL) is 8.50%.

The Cost of Debt of HPP Holdings Bhd (HPPHB.KL) is 5.10%.

	Range	Selected
Cost of equity	7.00% - 10.00%	8.50%
Tax rate	25.80% - 26.80%	26.30%
Cost of debt	4.90% - 5.30%	5.10%
WACC	6.8% - 9.5%	8.1%

WACC

HPPHB.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.48	0.66

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.00%	10.00%

Tax rate	25.80%	26.80%
Debt/Equity ratio	0.09	0.09
Cost of debt	4.90%	5.30%

After-tax WACC	6.8%	9.5%


Selected WACC	8.1%

HPPHB.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 HPPHB.KL:

cost_of_equity (8.50%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.48) + 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.