1119.HK WACC - Weighted Average Cost of Capital

The WACC of iDreamSky Technology Holdings Ltd (1119.HK) is 8.5%.

The Cost of Equity of iDreamSky Technology Holdings Ltd (1119.HK) is 11.20%.

The Cost of Debt of iDreamSky Technology Holdings Ltd (1119.HK) is 6.05%.

	Range	Selected
Cost of equity	7.80% - 14.60%	11.20%
Tax rate	2.40% - 3.80%	3.10%
Cost of debt	5.10% - 7.00%	6.05%
WACC	6.4% - 10.6%	8.5%

WACC

1119.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.82	1.54

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.80%	14.60%

Tax rate	2.40%	3.80%
Debt/Equity ratio	1.01	1.01
Cost of debt	5.10%	7.00%

After-tax WACC	6.4%	10.6%


Selected WACC	8.5%

1119.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 1119.HK:

cost_of_equity (11.20%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.82) + 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.