RANHILL.KL WACC - Weighted Average Cost of Capital

The WACC of Ranhill Utilities Bhd (RANHILL.KL) is 8.6%.

The Cost of Equity of Ranhill Utilities Bhd (RANHILL.KL) is 9.50%.

The Cost of Debt of Ranhill Utilities Bhd (RANHILL.KL) is 10.55%.

	Range	Selected
Cost of equity	8.00% - 11.00%	9.50%
Tax rate	31.80% - 33.30%	32.55%
Cost of debt	5.50% - 15.60%	10.55%
WACC	6.4% - 10.8%	8.6%

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	0.62	0.8

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.00%	11.00%

Tax rate	31.80%	33.30%
Debt/Equity ratio	0.61	0.61
Cost of debt	5.50%	15.60%

After-tax WACC	6.4%	10.8%


Selected WACC	8.6%

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 (9.50%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.62) + 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.