SUNCON.KL WACC - Weighted Average Cost of Capital

The WACC of Sunway Construction Group Bhd (SUNCON.KL) is 9.7%.

The Cost of Equity of Sunway Construction Group Bhd (SUNCON.KL) is 10.20%.

The Cost of Debt of Sunway Construction Group Bhd (SUNCON.KL) is 5.65%.

	Range	Selected
Cost of equity	9.10% - 11.30%	10.20%
Tax rate	26.20% - 27.30%	26.75%
Cost of debt	4.90% - 6.40%	5.65%
WACC	8.6% - 10.8%	9.7%

WACC

SUNCON.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.77	0.83

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.10%	11.30%

Tax rate	26.20%	27.30%
Debt/Equity ratio	0.09	0.09
Cost of debt	4.90%	6.40%

After-tax WACC	8.6%	10.8%


Selected WACC	9.7%

SUNCON.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 SUNCON.KL:

cost_of_equity (10.20%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.77) + 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.