China Securities Co., Ltd.: Maintains a buy rating on Waterdrop, Inc. ADR Class A (WDH.US) AI-driven quality improvement and efficiency enhancement.

After Waterdrop, Inc. ADR Class A (WDH.US) released its third-quarter performance for 2025, China Securities Co., Ltd. issued a research report stating that they maintain a buy rating for Waterdrop, Inc. ADR Class A. The analysis in the research report believes that the better-than-expected performance of Waterdrop, Inc. ADR Class A in terms of Q3 revenue and net profit, effectively confirms that the company has emerged from an adjustment period and entered a stage of high-quality growth. Combined with the efficiency revolution brought by the implementation of AI strategies in marketing and risk control, as well as the certainty of shareholder returns brought by the company's ongoing buyback and dividend policies, the future growth space for the company is promising. Waterdrop, Inc. ADR Class A has achieved profitability for 15 consecutive quarters. In the third quarter of 2025, the company achieved a net operating income of 975 million yuan, a year-on-year increase of 38.4%; net profit attributable to the parent reached 158 million yuan, a year-on-year increase of 60.1%, and the net profit margin expanded from 14.1% in the same period last year to 16.3%, showing continuous enhancement in profitability. During the earnings conference, management emphasized that this growth was due to the upgrade of the data infrastructure, reducing decision delays to within 50 milliseconds, achieving precise identification and segmentation of traffic within milliseconds. This real-time data-based ROI dynamic strategy not only drove a 32.3% month-on-month increase in first-year premium (FYP), but also significantly improved customer acquisition efficiency and quality, verifying the company's execution capabilities in achieving "quality growth" in a complex market environment. The research report believes that the double acceleration of revenue and profit in the third quarter of Waterdrop, Inc. ADR Class A validates the effectiveness of the AI strategy. On the sales side, the rapid increase in premium scale facilitated by the "AI Medical Insurance Expert" by 82% proves that AI has direct commercial monetization capabilities. On the underwriting side, the industry's first AI underwriting assistant "KEYI.AI" has shortened the processing time for complex cases from minutes to seconds (1 second), with an accuracy rate of up to 99.8%, completely restructuring risk control efficiency. In addition, the company introduced the "Waterdrop Sea. AI" low-code platform, empowering internal employees to quickly build AI solutions, further reducing R&D and operational marginal costs, and building a complete technical moat from bottom-up models to top-level applications. Shen Peng, Founder and CEO of Waterdrop, Inc. ADR Class A, stated, "In the third quarter, AI technology as the core DRIVE for business quality improvement and efficiency enhancement, driving double-digit high-speed growth in company revenue and profit. Looking ahead, we will continue to seize the opportunities brought by technological evolution, promote the deep integration of AI capabilities in the entire business chain and innovative applications, injecting continuous momentum into the company's high-quality development. Based on this, we are committed to achieving long-term value for users to be at ease, partners to win together, and shareholders to trust!"