KLK.KL WACC - Weighted Average Cost of Capital

The WACC of Kuala Lumpur Kepong Bhd (KLK.KL) is 8.7%.

The Cost of Equity of Kuala Lumpur Kepong Bhd (KLK.KL) is 11.40%.

The Cost of Debt of Kuala Lumpur Kepong Bhd (KLK.KL) is 4.90%.

	Range	Selected
Cost of equity	10.30% - 12.50%	11.40%
Tax rate	21.60% - 25.60%	23.60%
Cost of debt	4.30% - 5.50%	4.90%
WACC	7.9% - 9.6%	8.7%

WACC

KLK.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.94	0.98

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.30%	12.50%

Tax rate	21.60%	25.60%
Debt/Equity ratio	0.53	0.53
Cost of debt	4.30%	5.50%

After-tax WACC	7.9%	9.6%


Selected WACC	8.7%

KLK.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 KLK.KL:

cost_of_equity (11.40%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.94) + 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.