SPSETIA.KL WACC - Weighted Average Cost of Capital

The WACC of S P Setia Bhd (SPSETIA.KL) is 6.6%.

The Cost of Equity of S P Setia Bhd (SPSETIA.KL) is 14.80%.

The Cost of Debt of S P Setia Bhd (SPSETIA.KL) is 4.95%.

	Range	Selected
Cost of equity	13.20% - 16.40%	14.80%
Tax rate	37.00% - 40.10%	38.55%
Cost of debt	4.60% - 5.30%	4.95%
WACC	6.1% - 7.2%	6.6%

WACC

SPSETIA.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	1.38	1.48

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.20%	16.40%

Tax rate	37.00%	40.10%
Debt/Equity ratio	2.25	2.25
Cost of debt	4.60%	5.30%

After-tax WACC	6.1%	7.2%


Selected WACC	6.6%

SPSETIA.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 SPSETIA.KL:

cost_of_equity (14.80%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (1.38) + 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.