The WACC of Orion lXL Bhd (ORION.KL) is 11.4%.
| Range | Selected | |
| Cost of equity | 9.70% - 13.20% | 11.45% |
| Tax rate | -% - 0.10% | 0.05% |
| Cost of debt | 7.00% - 7.00% | 7.00% |
| WACC | 9.7% - 13.1% | 11.4% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.9% | 6.9% |
| Adjusted beta | 0.92 | 1.15 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.70% | 13.20% |
| Tax rate | -% | 0.10% |
| Debt/Equity ratio | 0.02 | 0.02 |
| Cost of debt | 7.00% | 7.00% |
| After-tax WACC | 9.7% | 13.1% |
| Selected WACC | 11.4% | |
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 ORION.KL:
cost_of_equity (11.45%) = risk_free_rate (4.45%) + equity_risk_premium (6.40%) * adjusted_beta (0.92) + 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.