SOP.KL WACC - Weighted Average Cost of Capital

The WACC of Sarawak Oil Palms Bhd (SOP.KL) is 9.6%.

The Cost of Equity of Sarawak Oil Palms Bhd (SOP.KL) is 10.85%.

The Cost of Debt of Sarawak Oil Palms Bhd (SOP.KL) is 4.25%.

	Range	Selected
Cost of equity	9.80% - 11.90%	10.85%
Tax rate	24.50% - 24.90%	24.70%
Cost of debt	4.00% - 4.50%	4.25%
WACC	8.7% - 10.6%	9.6%

WACC

SOP.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.87	0.91

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.80%	11.90%

Tax rate	24.50%	24.90%
Debt/Equity ratio	0.19	0.19
Cost of debt	4.00%	4.50%

After-tax WACC	8.7%	10.6%


Selected WACC	9.6%

SOP.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 SOP.KL:

cost_of_equity (10.85%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.87) + 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.