SDRED.KL WACC - Weighted Average Cost of Capital

The WACC of Selangor Dredging Bhd (SDRED.KL) is 5.0%.

The Cost of Equity of Selangor Dredging Bhd (SDRED.KL) is 7.90%.

The Cost of Debt of Selangor Dredging Bhd (SDRED.KL) is 5.70%.

	Range	Selected
Cost of equity	6.70% - 9.10%	7.90%
Tax rate	35.20% - 42.50%	38.85%
Cost of debt	4.00% - 7.40%	5.70%
WACC	4.1% - 6.0%	5.0%

WACC

SDRED.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.43	0.55

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.70%	9.10%

Tax rate	35.20%	42.50%
Debt/Equity ratio	1.79	1.79
Cost of debt	4.00%	7.40%

After-tax WACC	4.1%	6.0%


Selected WACC	5.0%

SDRED.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 SDRED.KL:

cost_of_equity (7.90%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.43) + 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.