STRAITS.KL WACC - Weighted Average Cost of Capital

The WACC of Straits Inter Logistics Bhd (STRAITS.KL) is 4.5%.

The Cost of Equity of Straits Inter Logistics Bhd (STRAITS.KL) is 10.75%.

The Cost of Debt of Straits Inter Logistics Bhd (STRAITS.KL) is 6.25%.

	Range	Selected
Cost of equity	6.90% - 14.60%	10.75%
Tax rate	28.20% - 40.10%	34.15%
Cost of debt	5.50% - 7.00%	6.25%
WACC	4.1% - 4.9%	4.5%

WACC

STRAITS.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.46	1.25

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	14.60%

Tax rate	28.20%	40.10%
Debt/Equity ratio	12.96	12.96
Cost of debt	5.50%	7.00%

After-tax WACC	4.1%	4.9%


Selected WACC	4.5%

STRAITS.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 STRAITS.KL:

cost_of_equity (10.75%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.46) + 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.