KPJ.KL WACC - Weighted Average Cost of Capital

The WACC of KPJ Healthcare Bhd (KPJ.KL) is 8.7%.

The Cost of Equity of KPJ Healthcare Bhd (KPJ.KL) is 10.15%.

The Cost of Debt of KPJ Healthcare Bhd (KPJ.KL) is 4.35%.

	Range	Selected
Cost of equity	8.90% - 11.40%	10.15%
Tax rate	26.60% - 28.50%	27.55%
Cost of debt	4.00% - 4.70%	4.35%
WACC	7.6% - 9.7%	8.7%

WACC

KPJ.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.75	0.84

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.90%	11.40%

Tax rate	26.60%	28.50%
Debt/Equity ratio	0.27	0.27
Cost of debt	4.00%	4.70%

After-tax WACC	7.6%	9.7%


Selected WACC	8.7%

KPJ.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 KPJ.KL:

cost_of_equity (10.15%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.75) + 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.