3860.HK WACC - Weighted Average Cost of Capital

The WACC of Speed Apparel Holding Ltd (3860.HK) is 7.0%.

The Cost of Equity of Speed Apparel Holding Ltd (3860.HK) is 6.45%.

The Cost of Debt of Speed Apparel Holding Ltd (3860.HK) is 43.15%.

	Range	Selected
Cost of equity	5.00% - 7.90%	6.45%
Tax rate	9.50% - 10.40%	9.95%
Cost of debt	7.00% - 79.30%	43.15%
WACC	5.1% - 9.0%	7.0%

WACC

3860.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.36	0.58

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.00%	7.90%

Tax rate	9.50%	10.40%
Debt/Equity ratio	0.02	0.02
Cost of debt	7.00%	79.30%

After-tax WACC	5.1%	9.0%


Selected WACC	7.0%

3860.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 3860.HK:

cost_of_equity (6.45%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.36) + 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.