RL.KL WACC - Weighted Average Cost of Capital

The WACC of Reservoir Link Energy Bhd (RL.KL) is 8.5%.

The Cost of Equity of Reservoir Link Energy Bhd (RL.KL) is 10.90%.

The Cost of Debt of Reservoir Link Energy Bhd (RL.KL) is 7.45%.

	Range	Selected
Cost of equity	9.70% - 12.10%	10.90%
Tax rate	28.60% - 36.00%	32.30%
Cost of debt	4.40% - 10.50%	7.45%
WACC	7.1% - 10.0%	8.5%

WACC

RL.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.86	0.93

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.70%	12.10%

Tax rate	28.60%	36.00%
Debt/Equity ratio	0.65	0.65
Cost of debt	4.40%	10.50%

After-tax WACC	7.1%	10.0%


Selected WACC	8.5%

RL.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 RL.KL:

cost_of_equity (10.90%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.86) + 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.