The WACC of Perak Transit Bhd (PTRANS.KL) is 7.0%.
Range | Selected | |
Cost of equity | 7.8% - 10.9% | 9.35% |
Tax rate | 20.2% - 20.9% | 20.55% |
Cost of debt | 5.6% - 6.0% | 5.8% |
WACC | 6.1% - 7.8% | 7.0% |
Category | Low | High |
Long-term bond rate | 3.8% | 4.3% |
Equity market risk premium | 6.9% | 7.8% |
Adjusted beta | 0.58 | 0.78 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.8% | 10.9% |
Tax rate | 20.2% | 20.9% |
Debt/Equity ratio | 0.99 | 0.99 |
Cost of debt | 5.6% | 6.0% |
After-tax WACC | 6.1% | 7.8% |
Selected WACC | 7.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
PTRANS.KL | Perak Transit Bhd | 0.99 | 0.08 | 0.04 |
000650.KS | Chunil Express Co Ltd | 0.24 | 0.32 | 0.27 |
052300.KQ | W Holding Company Co Ltd | 0.13 | 0.54 | 0.49 |
2611.TW | Tze Shin International Co Ltd | 0.24 | 0.52 | 0.44 |
DL1.VN | Viet Nam Renewable Energy Group JSC | 0.97 | 1.7 | 0.96 |
GCAP.KL | G Capital Bhd | 0.52 | -0.01 | -0.01 |
KIAT.BK | Kiattana Transport PCL | 0.11 | 0.48 | 0.44 |
KTB.KL | Konsortium Transnasional Bhd | 0.08 | 0.35 | 0.33 |
TNLOGIS.KL | Tiong Nam Logistics Holdings Bhd | 4.68 | 0.01 | 0 |
XINHWA.KL | Xin Hwa Holdings Bhd | 3.92 | 0.53 | 0.13 |
Low | High | |
Unlevered beta | 0.21 | 0.38 |
Relevered beta | 0.37 | 0.67 |
Adjusted relevered beta | 0.58 | 0.78 |
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 PTRANS.KL:
cost_of_equity (9.35%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.58) + 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.