The US Stock Research Agency learned that recently, China International Capital Corporation released$Waterdrop (WDH.US)$The performance report showed that Waterdrop Inc. 's cost control ability and profitability exceeded expectations in the third quarter of 2022, giving it a "outperform industry" rating.
Waterdrop Inc. 's third-quarter revenue was 770 million yuan, an increase of 10.1% month-on-month. The net profits of GAAP and Non-GAAP were 170 million yuan and 220 million yuan respectively, both becoming regular employees compared with the same period last year. According to the management performance guidelines, the company's annual net profit in 2022 is about 500 million yuan, revenue in 2023 is more than 10% higher than the same period last year, and the net profit is not lower than that of the same industry.
CICC Research News analysis, Waterdrop Inc. 's better-than-expected performance is mainly due to improved cost control. Waterdrop Inc. 's operating costs and expenses were greatly optimized in the third quarter compared with the same period last year, falling by 50.5% to 640 million yuan. Mainly due to the reduction of third-party channels under the new business model (marketing expenses decreased by 82.4% in the third quarter compared with the same period last year), and management expenses and R & D cost optimization.
Waterdrop Inc. began to switch business models in the second half of 2021, reducing external delivery, paying more attention to customer acquisition quality and stock customer operation, and the repurchase rate, renewal rate and profitability of insurance business have improved significantly since 2022.
According to the financial report, the structure of Waterdrop Inc. 's insurance products continued to optimize in the third quarter, and the first-year premium contributed by heavy illness insurance increased by 7.8% over the previous quarter, accounting for 28.6% of the overall first-year premium. The health of the business has improved significantly, with premiums for customers under the age of 40 up 20% from the previous quarter. CICC believes that Waterdrop Inc. has gone through a difficult transition period and is expected to reshape the growth track and achieve quality and sustainable growth.
Based on a sharp improvement in profitability, CICC raised Waterdrop Inc. 's target share price by 17 per cent to $2.70, which is 44.7 per cent higher than the current share price.
Waterdrop Inc. shares closed at $2.21 on Dec. 8, up 9.95% on the day and up more than 37% in four trading days this week.