FAJAR.KL WACC - Weighted Average Cost of Capital

The WACC of Fajarbaru Builder Group Bhd (FAJAR.KL) is 8.1%.

The Cost of Equity of Fajarbaru Builder Group Bhd (FAJAR.KL) is 9.80%.

The Cost of Debt of Fajarbaru Builder Group Bhd (FAJAR.KL) is 4.25%.

	Range	Selected
Cost of equity	7.40% - 12.20%	9.80%
Tax rate	25.80% - 29.00%	27.40%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.3% - 9.9%	8.1%

WACC

FAJAR.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.53	0.95

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.40%	12.20%

Tax rate	25.80%	29.00%
Debt/Equity ratio	0.35	0.35
Cost of debt	4.00%	4.50%

After-tax WACC	6.3%	9.9%


Selected WACC	8.1%

FAJAR.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 FAJAR.KL:

cost_of_equity (9.80%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.53) + 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.