RANHILL.KL WACC - Weighted Average Cost of Capital

The WACC of Ranhill Utilities Bhd (RANHILL.KL) is 9.0%.

The Cost of Equity of Ranhill Utilities Bhd (RANHILL.KL) is 10.10%.

The Cost of Debt of Ranhill Utilities Bhd (RANHILL.KL) is 10.95%.

	Range	Selected
Cost of equity	7.90% - 12.30%	10.10%
Tax rate	32.40% - 35.30%	33.85%
Cost of debt	6.30% - 15.60%	10.95%
WACC	6.6% - 11.5%	9.0%

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	0.6	0.96

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	12.30%

Tax rate	32.40%	35.30%
Debt/Equity ratio	0.56	0.56
Cost of debt	6.30%	15.60%

After-tax WACC	6.6%	11.5%


Selected WACC	9.0%

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 (10.10%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.6) + 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.