SPRING.KL WACC - Weighted Average Cost of Capital

The WACC of Spring Art Holdings Bhd (SPRING.KL) is 8.1%.

The Cost of Equity of Spring Art Holdings Bhd (SPRING.KL) is 7.95%.

The Cost of Debt of Spring Art Holdings Bhd (SPRING.KL) is 12.80%.

	Range	Selected
Cost of equity	6.50% - 9.40%	7.95%
Tax rate	25.60% - 30.90%	28.25%
Cost of debt	4.80% - 20.80%	12.80%
WACC	6.0% - 10.2%	8.1%

WACC

SPRING.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.39	0.58

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.50%	9.40%

Tax rate	25.60%	30.90%
Debt/Equity ratio	0.21	0.21
Cost of debt	4.80%	20.80%

After-tax WACC	6.0%	10.2%


Selected WACC	8.1%

SPRING.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 SPRING.KL:

cost_of_equity (7.95%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.39) + 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.