SOLID.KL WACC - Weighted Average Cost of Capital

The WACC of Solid Automotive Bhd (SOLID.KL) is 9.2%.

The Cost of Equity of Solid Automotive Bhd (SOLID.KL) is 12.35%.

The Cost of Debt of Solid Automotive Bhd (SOLID.KL) is 4.35%.

	Range	Selected
Cost of equity	10.50% - 14.20%	12.35%
Tax rate	17.30% - 21.80%	19.55%
Cost of debt	4.20% - 4.50%	4.35%
WACC	8.0% - 10.4%	9.2%

WACC

SOLID.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.98	1.2

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.50%	14.20%

Tax rate	17.30%	21.80%
Debt/Equity ratio	0.56	0.56
Cost of debt	4.20%	4.50%

After-tax WACC	8.0%	10.4%


Selected WACC	9.2%

SOLID.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 SOLID.KL:

cost_of_equity (12.35%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.98) + 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.