MHC.KL WACC - Weighted Average Cost of Capital

The WACC of MHC Plantations Bhd (MHC.KL) is 9.4%.

The Cost of Equity of MHC Plantations Bhd (MHC.KL) is 11.30%.

The Cost of Debt of MHC Plantations Bhd (MHC.KL) is 4.60%.

	Range	Selected
Cost of equity	9.60% - 13.00%	11.30%
Tax rate	29.10% - 30.30%	29.70%
Cost of debt	4.40% - 4.80%	4.60%
WACC	8.1% - 10.7%	9.4%

WACC

MHC.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.84	1.04

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.60%	13.00%

Tax rate	29.10%	30.30%
Debt/Equity ratio	0.3	0.3
Cost of debt	4.40%	4.80%

After-tax WACC	8.1%	10.7%


Selected WACC	9.4%

MHC.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 MHC.KL:

cost_of_equity (11.30%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.84) + 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.