Goldman Sachs: Maintaining Waterdrop's (WDH.US) “Buy” Rating Target Price of $1.8

The Zhitong Finance App learned that after Shuidi (WDH.US) announced the results for the first quarter of 2025, Goldman Sachs released the latest research report on June 8 to maintain Shuidi's “buy” rating and give Shuidi a target price of 1.8 US dollars for the next 12 months. Goldman Sachs Research reports that along with the application of AI models in business scenarios, Shuidi's operating efficiency has improved markedly, which has also boosted both the company's revenue and profit growth. In the first quarter of 2025, Shuidi's net revenue was 754 million yuan, up 7% year on year; net profit to mother was 108 million yuan, up 34.2% year on year.

According to the Goldman Sachs Research Report, Shuidi's operating profit increased in the first quarter. On the one hand, the results of improving efficiency and reducing costs in the insurance business were shown; on the other hand, losses in the non-insurance business also declined year-on-year. In the insurance business, revenue for the quarter increased 8.4% year on year, and first-year premium (FYP) increased 19.3% year over year. The difference in revenue and premium growth rate was mainly related to the increase in the share of short-term insurance.

As the first company to lay out AI models in the industry, Shuidi has been driven by technology since its inception. It has invested nearly 300 million yuan in research and development every year, applied for 51 patents related to big models, and built a large model application system covering all insurance scenarios. Shuidi Company uses a self-developed insurance model to achieve intelligent upgrades in customer acquisition, sales assistance, customer operation, and risk control. Continued investment in R&D will strengthen AI-driven refined operations and improve operational leverage and sales transformation efficiency.

In this quarter, Shuidi's AI applications continued to empower and improve efficiency in various business areas. The “AI Quality Inspection Assistant” improves quality management efficiency through AI large model reasoning capabilities, increasing the efficiency of quality inspection personnel by 83%. In addition, the “Water Drop Water Guard AI Insurance Expert” business has improved significantly, achieving monthly supplementary premiums of more than 2 million yuan in the telephone service scenario. In the customer service process, “AI customer service” covers various insurance customer service scenarios such as insurance policy consultation, policy management, and product question answering. It can respond to user inquiries in a timely manner 7 x 24 hours a day, with a resolution rate of 52%.

Looking ahead, Shuidi has maintained its annual revenue growth target of 20% and is expected to grow faster in the second half of 2025 than in the first half of the year. At the same time, distribution costs that support the company's revenue growth goals are also expected to rise, which may put some pressure on net profit growth. According to the results and company guidelines for the first quarter of 2025, Goldman Sachs slightly raised Shuidi's first-year premium forecast for 2025-2027.