Dahua Jixian: Reaffirming the buy rating on Waterdrop, Inc. ADR Class A (WDH.US) and raising the target price to $2.95.

After Waterdrop, Inc. ADR Class A (WDH.US) released its fourth quarter and full-year performance for 2025, Dahua Jixian recently published a research report stating that Waterdrop, Inc. ADR Class A's fourth quarter performance in 2025 exceeded expectations, with a year-on-year increase in net profit attributable to shareholders of over 60%. Based on the company's strong performance, Dahua Jixian has raised its revenue and net profit forecast for Waterdrop, Inc. ADR Class A in 2026, reiterated a "buy" rating, and raised the target price from $2.91 to $2.95. The research report analysis stated that Waterdrop, Inc. ADR Class A's performance exceeded Dahua Jixian's previous expectations by 21%. The performance exceeded expectations mainly due to the rapid growth of the insurance business driven by AI. In the fourth quarter of 2025, Waterdrop, Inc. ADR Class A's net operating income was 1.411 billion yuan, with a net profit attributable to shareholders of 162 million yuan, a year-on-year increase of 62.7%, achieving profitability for 16 consecutive quarters. Looking at the full year of 2025, net operating income was 3.978 billion yuan, a year-on-year increase of 43.5%; net profit attributable to shareholders was 569 million yuan, a year-on-year increase of 54.8%. The insurance business alone brought in revenue of 3.577 billion yuan for the full year, a year-on-year increase of 51.3%. Waterdrop, Inc. ADR Class A company adheres to the strategic direction of "technology-driven growth," continuously deepens the construction of its AI technology system, and accelerates its evolution into an AI-native company. As of the end of December 2025, the company had applied for 72 patents related to large models. With the assistance of AI large models, Waterdrop, Inc. ADR Class A's insurance vertical scene service capabilities have greatly improved, with AI medical insurance expert assistance achieving a 145% increase in premium scale compared to the previous month, AI insurance customer service "Bao Xiaohui" serving over 1.4 million times in a single month, and AI quality inspection assistant helping to improve efficiency by 175% compared to traditional methods. On the product supply side, the market's first long-term guarantee renewal product "Seeing a Doctor Insurance," which requires no health declaration, continued to iterate in the fourth quarter, adding a "0 deductible" feature design; the series of products for pre-existing conditions continued to be well received by users, contributing to a nearly 70% year-on-year growth in premium for pre-existing condition insurance products in the fourth quarter. In addition, Waterdrop, Inc. ADR Class A is also exploring providing an open collaborative infrastructure for AI agents to cooperate with each other. The company's recent AI assistant, ClawSquare, based on a distributed architecture, can support AI agents from various functions such as administration, human resources, and research and development to autonomously communicate and collaborate on tasks. The research report points out that AI is more likely to become a catalyst for accelerating online penetration and improving service efficiency, and Waterdrop, Inc. ADR Class A's first-mover advantage allows it to benefit from deeper AI integration, accelerating business scale expansion and improving operational efficiency. Waterdrop, Inc. ADR Class A's founder and CEO, Shen Peng, stated, "In 2025, Waterdrop, Inc. ADR Class A is anchoring its core strategic direction of 'technology-driven growth,' achieving operational efficiency leaps through AI full-chain penetration, and rapid growth in revenue and profit. Looking to the future, the AI wave is reconstructing the industry ecosystem at an unprecedented rate. We will systematically transition from 'using AI tools' to an 'AI-native company', allowing AI to deeply embed in customer acquisition, underwriting, claims, and service value chains, safeguarding millions of families with the goodness of technology, and creating sustainable long-term value for users, partners, and society."