UOB Kay Hian: Maintains "Buy" rating on Waterdrop, Inc. ADR Class A (WDH.US), raises target price to $2.23

UOB Kay Hian recently issued a research report stating that Waterdrop, Inc. ADR Class A (WDH.US) delivered solid results in the second quarter of 2026, with sustained momentum in revenue and profit growth. Based on upward revisions to earnings forecasts, UOB Kay Hian maintains a "Buy" rating on Waterdrop, Inc. ADR Class A and raises the target price to $2.23. According to the research report, Waterdrop, Inc. ADR Class A achieved net profit attributable to shareholders of RMB 126 million in the second quarter of 2026. On the revenue side, net operating revenue reached RMB 1.448 billion in the second quarter, up 72.8% year-over-year. Among this, insurance segment revenue grew 80.5% year-over-year, and first-year regular premium (long-term insurance) increased 33.4% quarter-over-quarter. Digital clinical trial solution revenue grew 26.8% year-over-year. UOB Kay Hian emphasized in the research report that the deep deployment of Waterdrop, Inc. ADR Class A's AI technology has become the core engine driving CKH HOLDINGS' efficiency improvements. Management noted that the "AI Medical Insurance Expert" contributed 25.6% quarter-over-quarter growth in premiums in the second quarter, benefiting from AI-driven demand insights and continuous optimization of conversion tools. Looking ahead, Waterdrop, Inc. ADR Class A positions AI as a company-wide growth and efficiency engine, and expects AI-related investment to continue increasing, while maintaining R&D expenses as a proportion of revenue within a reasonable range. In terms of product innovation, leveraging its massive claims data accumulation and user demand insights, Waterdrop, Inc. ADR Class A has broken the traditional static logic of blanket rejection of chronic disease patients, making it possible for users with pre-existing conditions to obtain insurance coverage. In this quarter, Waterdrop, Inc. ADR Class A launched the industry's first long-term critical illness product with no health disclosure requirement and a 5-year guaranteed renewal, "Rongyibao," covering over a hundred major critical illnesses and allowing riders for accidental death and disability benefits; it also expanded the "Jixing Gaozhao" product matrix, adding the industry's first specific disease insurance with lifetime no health disclosure requirement. Shen Peng, founder and CEO of Waterdrop, Inc. ADR Class A, stated: "Waterdrop, Inc. ADR Class A has always regarded technology as the core engine of the company's development. Currently, AI capabilities have been deeply embedded in all business platforms, enabling us to more precisely capture the growing market demand in existing businesses and consolidate and strengthen our competitive barriers. In the future, we will continue to strengthen our technology and AI capabilities, steadily advance business expansion, maintain strategic investment, and create long-term, sustainable value for shareholders."