The WACC of YKGI Holdings Bhd (YKGI.KL) is 9.2%.
| Range | Selected | |
| Cost of equity | 9.60% - 14.30% | 11.95% |
| Tax rate | 26.40% - 40.80% | 33.60% |
| Cost of debt | 5.40% - 19.90% | 12.65% |
| WACC | 5.8% - 12.6% | 9.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 7.3% | 8.3% |
| Adjusted beta | 0.78 | 1.14 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.60% | 14.30% |
| Tax rate | 26.40% | 40.80% |
| Debt/Equity ratio | 2.01 | 2.01 |
| Cost of debt | 5.40% | 19.90% |
| After-tax WACC | 5.8% | 12.6% |
| Selected WACC | 9.2% | |
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 YKGI.KL:
cost_of_equity (11.95%) = risk_free_rate (4.15%) + equity_risk_premium (7.80%) * adjusted_beta (0.78) + 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.