RANHILL.KL WACC - Weighted Average Cost of Capital

The WACC of Ranhill Utilities Bhd (RANHILL.KL) is 7.8%.

The Cost of Equity of Ranhill Utilities Bhd (RANHILL.KL) is 9.85%.

The Cost of Debt of Ranhill Utilities Bhd (RANHILL.KL) is 6.20%.

	Range	Selected
Cost of equity	8.10% - 11.60%	9.85%
Tax rate	31.80% - 33.30%	32.55%
Cost of debt	5.50% - 6.90%	6.20%
WACC	6.6% - 9.1%	7.8%

WACC

RANHILL.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.64	0.87

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.10%	11.60%

Tax rate	31.80%	33.30%
Debt/Equity ratio	0.56	0.56
Cost of debt	5.50%	6.90%

After-tax WACC	6.6%	9.1%


Selected WACC	7.8%

RANHILL.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 RANHILL.KL:

cost_of_equity (9.85%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.64) + 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.