Goldman Research Report: Waterdrop's target price is US$1.9, maintaining the buy rating

After the announcement of Waterdrop's 2024Q2 results, Goldman's latest research report maintained the "buy" rating of Waterdrop and gave a target price of US$1.9 for Waterdrop in the next 12 months.

Waterdrop's net profit attributable to parent in 2024Q2 was RMB88.29mn, up 306.9% YoY, exceeding expectations by 21%. The report pointed out that the excess was mainly due to stable profits in insurance business and continuous reduction of losses in non-insurance business and so on. Goldman gave positive evaluation to Waterdrop's robust profitability and active shareholder return policy.

Regarding stock repurchases, since Waterdrop announced the launch of its stock repurchase plan in September 2021, as of August 31, 2024, Waterdrop has spent about US$100mn to repurchase about 49.3mn ADSs from the open market. In addition, Waterdrop announced a new stock repurchase plan. After approval by the board of directors, Waterdrop will repurchase shares with a total amount not exceeding US$50mn in the next 12 months from the open market.

Goldman's analyst believes that Waterdrop has achieved a good balance between new customer acquisition and existing customer retention, and its insurance business continues to maintain an operating profit margin of over 20%. At the same time, the Company is working to reduce losses in non-insurance businesses. Goldman expects this strategy to drive Waterdrop's overall margin improvement, thus giving a buy rating.