The Zhitong Finance App learned that after the release of Shuidi Company (WDH.US)'s 2023 Q1 earnings report, Goldman Sachs's latest research report maintained Shuidi's “buy” rating. Goldman Sachs analysts believe that Shuidi's net profit in Q1 is in line with expectations, and sales of long-term insurance products are still the key for Shuidi to increase its value.

Shuidi's Q1 revenue was 606 million yuan and net profit was 49.73 million yuan, maintaining profit for 5 consecutive quarters. Goldman Sachs's research report shows that in Q1 of 2023, Shuidi's marketing expenses for third party channels increased. This is the first month-on-month increase since Shuidi adjusted its strategy at the end of 2021. This indicates that Shuidi's business focus has begun to shift to acquiring new customers and increasing performance.

Goldman Sachs believes that compared with 2021, Shuidi is currently better able to drive continuous growth in performance. By the end of the first quarter of 2023, the balance of cash and cash equivalents held by Shuidi Company was about 3.6 billion yuan, and has continued to achieve positive cash flow since the third quarter of 2021.

Goldman Sachs Research Report also mentioned that Shuidi announced a strategic investment in Deep Blue Insurance on June 9, which will help Shuidi further explore the needs of its huge user base and increase sales of long-term insurance products.

Goldman Sachs analysts maintain Shuidi's “buy” rating. The target price for 12 months is $3.2 per ADS share, mainly based on 12 times the EV/EBITDA for fiscal year 2026. Assuming that the compound annual growth rate of Shuidi's revenue for the 2022-2026 fiscal year is 13%, and the EBITDA profit margin for fiscal year 2026 is 14%.