SSMS.JK WACC - Weighted Average Cost of Capital

The WACC of Sawit Sumbermas Sarana Tbk PT (SSMS.JK) is 9.8%.

The Cost of Equity of Sawit Sumbermas Sarana Tbk PT (SSMS.JK) is 17.25%.

The Cost of Debt of Sawit Sumbermas Sarana Tbk PT (SSMS.JK) is 5.50%.

	Range	Selected
Cost of equity	14.60% - 19.90%	17.25%
Tax rate	26.60% - 29.20%	27.90%
Cost of debt	4.00% - 7.00%	5.50%
WACC	8.1% - 11.5%	9.8%

WACC

SSMS.JK WACC calculation

Category	Low	High

Long-term bond rate	6.6%	7.1%
Equity market risk premium	7.9%	8.9%
Adjusted beta	1.02	1.38

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.60%	19.90%

Tax rate	26.60%	29.20%
Debt/Equity ratio	1.26	1.26
Cost of debt	4.00%	7.00%

After-tax WACC	8.1%	11.5%


Selected WACC	9.8%

SSMS.JK'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 SSMS.JK:

cost_of_equity (17.25%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (1.02) + 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.