1086.HK WACC - Weighted Average Cost of Capital

The WACC of Goodbaby International Holdings Ltd (1086.HK) is 9.9%.

The Cost of Equity of Goodbaby International Holdings Ltd (1086.HK) is 15.00%.

The Cost of Debt of Goodbaby International Holdings Ltd (1086.HK) is 4.55%.

	Range	Selected
Cost of equity	12.80% - 17.20%	15.00%
Tax rate	10.90% - 16.30%	13.60%
Cost of debt	4.00% - 5.10%	4.55%
WACC	8.5% - 11.2%	9.9%

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	1.65	1.91

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.80%	17.20%

Tax rate	10.90%	16.30%
Debt/Equity ratio	0.86	0.86
Cost of debt	4.00%	5.10%

After-tax WACC	8.5%	11.2%


Selected WACC	9.9%

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 (15.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.65) + 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.