SPRING.KL WACC - Weighted Average Cost of Capital

The WACC of Spring Art Holdings Bhd (SPRING.KL) is 8.5%.

The Cost of Equity of Spring Art Holdings Bhd (SPRING.KL) is 9.65%.

The Cost of Debt of Spring Art Holdings Bhd (SPRING.KL) is 4.45%.

	Range	Selected
Cost of equity	7.60% - 11.70%	9.65%
Tax rate	23.10% - 25.20%	24.15%
Cost of debt	4.40% - 4.50%	4.45%
WACC	6.8% - 10.2%	8.5%

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	0.55	0.88

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.60%	11.70%

Tax rate	23.10%	25.20%
Debt/Equity ratio	0.22	0.22
Cost of debt	4.40%	4.50%

After-tax WACC	6.8%	10.2%


Selected WACC	8.5%

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 (9.65%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.55) + 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.