The WACC of S & F Capital Bhd (S&FCAP.KL) is 11.7%.
| Range | Selected | |
| Cost of equity | 5.40% - 10.30% | 7.85% |
| Tax rate | 1.00% - 1.80% | 1.40% |
| Cost of debt | 7.00% - 27.40% | 17.20% |
| WACC | 6.1% - 17.3% | 11.7% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | -0.05 | 0.45 |
| Additional risk adjustments | 2.0% | 2.5% |
| Cost of equity | 5.40% | 10.30% |
| Tax rate | 1.00% | 1.80% |
| Debt/Equity ratio | 0.74 | 0.74 |
| Cost of debt | 7.00% | 27.40% |
| After-tax WACC | 6.1% | 17.3% |
| Selected WACC | 11.7% | |
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 S&FCAP.KL:
cost_of_equity (7.85%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (-0.05) + risk_adjustments (2.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.