MLAB.KL WACC - Weighted Average Cost of Capital

The WACC of Mlabs Systems Bhd (MLAB.KL) is 8.1%.

The Cost of Equity of Mlabs Systems Bhd (MLAB.KL) is 7.75%.

The Cost of Debt of Mlabs Systems Bhd (MLAB.KL) is 11.95%.

	Range	Selected
Cost of equity	6.60% - 8.90%	7.75%
Tax rate	0.90% - 2.50%	1.70%
Cost of debt	7.00% - 16.90%	11.95%
WACC	6.7% - 9.5%	8.1%

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	0.42	0.53

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.60%	8.90%

Tax rate	0.90%	2.50%
Debt/Equity ratio	0.08	0.08
Cost of debt	7.00%	16.90%

After-tax WACC	6.7%	9.5%


Selected WACC	8.1%

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 (7.75%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.42) + 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.