1086.HK WACC - Weighted Average Cost of Capital

The WACC of Goodbaby International Holdings Ltd (1086.HK) is 10.0%.

The Cost of Equity of Goodbaby International Holdings Ltd (1086.HK) is 15.05%.

The Cost of Debt of Goodbaby International Holdings Ltd (1086.HK) is 5.00%.

	Range	Selected
Cost of equity	12.90% - 17.20%	15.05%
Tax rate	10.90% - 16.30%	13.60%
Cost of debt	4.00% - 6.00%	5.00%
WACC	8.5% - 11.5%	10.0%

WACC

1086.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.67	1.92

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.90%	17.20%

Tax rate	10.90%	16.30%
Debt/Equity ratio	0.89	0.89
Cost of debt	4.00%	6.00%

After-tax WACC	8.5%	11.5%


Selected WACC	10.0%

1086.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 1086.HK:

cost_of_equity (15.05%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.67) + 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.