It doesnt have any bearings. It did take on a little water but i have now greesed the inside of the shaft and no water at all comes in now.
Another problem was that the shaft and prop are not thread fitted, and due to this my boat cucked its prop on its first time out on the pond. (Nightmare!) I would recomend fitting an M2 shaft that is threaded at the prop end, and fit a threaded prop so this cannot happen. I did this after my little mishap, i also fitted a graupner motor coupling just to give myself total confidence that i wont get any problems with the set up again. The shaft, prop and coupling only cost me about £6
I hope this is of some help to you.
Jase