1058.HK WACC - Weighted Average Cost of Capital

The WACC of Guangdong Tannery Ltd (1058.HK) is 18.2%.

The Cost of Equity of Guangdong Tannery Ltd (1058.HK) is 6.85%.

The Cost of Debt of Guangdong Tannery Ltd (1058.HK) is 133.55%.

	Range	Selected
Cost of equity	5.40% - 8.30%	6.85%
Tax rate	0.80% - 1.10%	0.95%
Cost of debt	7.00% - 260.10%	133.55%
WACC	5.6% - 30.8%	18.2%

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	0.26	0.48

Additional risk adjustments	1.0%	1.5%
Cost of equity	5.40%	8.30%

Tax rate	0.80%	1.10%
Debt/Equity ratio	0.1	0.1
Cost of debt	7.00%	260.10%

After-tax WACC	5.6%	30.8%


Selected WACC	18.2%

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 (6.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.26) + risk_adjustments (1.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.