OVERSEA.KL WACC - Weighted Average Cost of Capital

The WACC of Oversea Enterprise Bhd (OVERSEA.KL) is 8.1%.

The Cost of Equity of Oversea Enterprise Bhd (OVERSEA.KL) is 8.25%.

The Cost of Debt of Oversea Enterprise Bhd (OVERSEA.KL) is 8.20%.

	Range	Selected
Cost of equity	6.80% - 9.70%	8.25%
Tax rate	11.60% - 21.70%	16.65%
Cost of debt	7.00% - 9.40%	8.20%
WACC	6.7% - 9.5%	8.1%

WACC

OVERSEA.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	0.62

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.80%	9.70%

Tax rate	11.60%	21.70%
Debt/Equity ratio	0.06	0.06
Cost of debt	7.00%	9.40%

After-tax WACC	6.7%	9.5%


Selected WACC	8.1%

OVERSEA.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 OVERSEA.KL:

cost_of_equity (8.25%) = 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.