1058.HK WACC - Weighted Average Cost of Capital

The WACC of Guangdong Tannery Ltd (1058.HK) is 15.3%.

The Cost of Equity of Guangdong Tannery Ltd (1058.HK) is 5.95%.

The Cost of Debt of Guangdong Tannery Ltd (1058.HK) is 182.75%.

	Range	Selected
Cost of equity	5.10% - 6.80%	5.95%
Tax rate	0.80% - 1.10%	0.95%
Cost of debt	7.00% - 358.50%	182.75%
WACC	5.2% - 25.4%	15.3%

WACC

1058.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.37	0.43

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.10%	6.80%

Tax rate	0.80%	1.10%
Debt/Equity ratio	0.06	0.06
Cost of debt	7.00%	358.50%

After-tax WACC	5.2%	25.4%


Selected WACC	15.3%

1058.HK'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 1058.HK:

cost_of_equity (5.95%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.37) + 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.