MLAB.KL WACC - Weighted Average Cost of Capital

The WACC of Mlabs Systems Bhd (MLAB.KL) is 7.9%.

The Cost of Equity of Mlabs Systems Bhd (MLAB.KL) is 7.70%.

The Cost of Debt of Mlabs Systems Bhd (MLAB.KL) is 11.20%.

	Range	Selected
Cost of equity	6.80% - 8.60%	7.70%
Tax rate	0.40% - 2.20%	1.30%
Cost of debt	7.00% - 15.40%	11.20%
WACC	6.8% - 9.0%	7.9%

WACC

MLAB.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.44	0.48

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.80%	8.60%

Tax rate	0.40%	2.20%
Debt/Equity ratio	0.07	0.07
Cost of debt	7.00%	15.40%

After-tax WACC	6.8%	9.0%


Selected WACC	7.9%

MLAB.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 MLAB.KL:

cost_of_equity (7.70%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.44) + 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.