The WACC of IDI Insurance Company Ltd (IDIN.TA) is 9.5%.
Range | Selected | |
Cost of equity | 9.0% - 12.3% | 10.65% |
Tax rate | 32.5% - 33.5% | 33% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 8.1% - 10.9% | 9.5% |
Category | Low | High |
Long-term bond rate | 4.8% | 5.3% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.67 | 0.9 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.0% | 12.3% |
Tax rate | 32.5% | 33.5% |
Debt/Equity ratio | 0.19 | 0.19 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 8.1% | 10.9% |
Selected WACC | 9.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
IDIN.TA | IDI Insurance Company Ltd | 0.19 | 1.47 | 1.31 |
8030.SR | Mediterranean and Gulf Cooperative Insurance and Reinsurance Company CJSC | 0 | 1.33 | 1.33 |
8170.SR | Al Etihad Cooperative Insurance Co SJSC | 0.01 | 0.94 | 0.93 |
8230.SR | Al Rajhi Company for Cooperative Insurance SJSC | 0 | 1.68 | 1.67 |
8250.SR | AXA Cooperative Insurance Company SJSC | 0.02 | 1.38 | 1.36 |
ALLIANZ.KL | Allianz Malaysia Bhd | 0.01 | 0.63 | 0.63 |
PVI.VN | PVI Holdings | 0.01 | 0.65 | 0.65 |
QISI.QA | Qatar Islamic Insurance Company QPSC | 0 | 0.16 | 0.16 |
RGSS.ME | SK Rosgosstrakh PAO | 0.01 | 0.12 | 0.12 |
TAKAFUL.KL | Syarikat Takaful Malaysia Keluarga Bhd | 0 | 0.19 | 0.19 |
TGH.BK | Thai Group Holdings PCL | 1.92 | 0.2 | 0.09 |
Low | High | |
Unlevered beta | 0.63 | 0.93 |
Relevered beta | 0.51 | 0.85 |
Adjusted relevered beta | 0.67 | 0.9 |
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 IDIN.TA:
cost_of_equity (10.65%) = risk_free_rate (5.05%) + equity_risk_premium (6.60%) * adjusted_beta (0.67) + 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.