SIMEPROP.KL WACC - Weighted Average Cost of Capital

The WACC of Sime Darby Property Bhd (SIMEPROP.KL) is 8.4%.

The Cost of Equity of Sime Darby Property Bhd (SIMEPROP.KL) is 10.85%.

The Cost of Debt of Sime Darby Property Bhd (SIMEPROP.KL) is 4.65%.

	Range	Selected
Cost of equity	9.50% - 12.20%	10.85%
Tax rate	32.90% - 33.50%	33.20%
Cost of debt	4.30% - 5.00%	4.65%
WACC	7.4% - 9.4%	8.4%

WACC

SIMEPROP.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.84	0.95

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.50%	12.20%

Tax rate	32.90%	33.50%
Debt/Equity ratio	0.47	0.47
Cost of debt	4.30%	5.00%

After-tax WACC	7.4%	9.4%


Selected WACC	8.4%

SIMEPROP.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 SIMEPROP.KL:

cost_of_equity (10.85%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.84) + 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.