The WACC of Zelan Bhd (ZELAN.KL) is 5.2%.
| Range | Selected | |
| Cost of equity | 4.70% - 11.10% | 7.90% |
| Tax rate | 10.20% - 20.20% | 15.20% |
| Cost of debt | 4.90% - 7.00% | 5.95% |
| WACC | 4.4% - 6.0% | 5.2% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | -0.23 | 0.49 |
| Additional risk adjustments | 2.5% | 3.0% |
| Cost of equity | 4.70% | 11.10% |
| Tax rate | 10.20% | 20.20% |
| Debt/Equity ratio | 11.06 | 11.06 |
| Cost of debt | 4.90% | 7.00% |
| After-tax WACC | 4.4% | 6.0% |
| Selected WACC | 5.2% | |
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 ZELAN.KL:
cost_of_equity (7.90%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (-0.23) + risk_adjustments (2.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.