GFM.KL WACC - Weighted Average Cost of Capital

The WACC of Gfm Services Bhd (GFM.KL) is 7.7%.

The Cost of Equity of Gfm Services Bhd (GFM.KL) is 16.15%.

The Cost of Debt of Gfm Services Bhd (GFM.KL) is 6.70%.

	Range	Selected
Cost of equity	13.00% - 19.30%	16.15%
Tax rate	40.80% - 43.80%	42.30%
Cost of debt	6.50% - 6.90%	6.70%
WACC	6.7% - 8.8%	7.7%

WACC

GFM.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	1.34	1.85

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.00%	19.30%

Tax rate	40.80%	43.80%
Debt/Equity ratio	2.16	2.16
Cost of debt	6.50%	6.90%

After-tax WACC	6.7%	8.8%


Selected WACC	7.7%

GFM.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 GFM.KL:

cost_of_equity (16.15%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (1.34) + 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.