MHB.KL WACC - Weighted Average Cost of Capital

The WACC of Malaysia Marine and Heavy Engineering Holdings Bhd (MHB.KL) is 8.4%.

The Cost of Equity of Malaysia Marine and Heavy Engineering Holdings Bhd (MHB.KL) is 10.25%.

The Cost of Debt of Malaysia Marine and Heavy Engineering Holdings Bhd (MHB.KL) is 4.55%.

	Range	Selected
Cost of equity	8.70% - 11.80%	10.25%
Tax rate	0.10% - 0.90%	0.50%
Cost of debt	4.40% - 4.70%	4.55%
WACC	7.3% - 9.5%	8.4%

WACC

MHB.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.72	0.89

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.70%	11.80%

Tax rate	0.10%	0.90%
Debt/Equity ratio	0.48	0.48
Cost of debt	4.40%	4.70%

After-tax WACC	7.3%	9.5%


Selected WACC	8.4%

MHB.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 MHB.KL:

cost_of_equity (10.25%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.72) + 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.