Core Viewpoint - The report from Open Source Securities indicates that GF Securities' placement of H-shares and issuance of convertible bonds will dilute total shares by 4% and H-shares by 19%, which is beneficial for international business in the medium to long term [1] Group 1 - The placement and issuance of convertible bonds will result in a 19% dilution of H-shares and a 4% dilution of total share capital [1] - The raised funds will be entirely used to increase capital for the company's overseas subsidiaries, supporting the development of international business [1] - Short-term pressure on stock prices, particularly in the Hong Kong market, is expected, but medium to long-term benefits for overseas business development and overall return on equity (ROE) are anticipated [1] Group 2 - The company’s fund management division holds a solid position in the industry and is expected to benefit from the beta of the cyclical fund market following a bull market [1] - The investment rating is maintained at "Buy" [1]

Core Viewpoint - Securities firms are optimistic about the industry outlook for 2026, focusing on valuation recovery and structural opportunities, with a shift in market drivers from valuation to earnings fundamentals [2][4]. Group 1: Industry Development Trends - The securities industry is expected to see core growth areas in wealth management, investment banking, internationalization, and technology empowerment [2]. - Wealth management is entering an upward trend, with strong new account openings and record-high financing balances, while A-share daily trading volume is projected to stabilize at 2 trillion yuan [2]. - The construction of product platforms is crucial for the transformation of wealth management, requiring alignment of product supply and sales channels [2]. Group 2: International Business Development - Developing international business is essential for securities firms to become leading investment banks, driven by increasing demand from overseas investors for Chinese assets [3]. - The international business revenue of securities firms has seen significant growth, with historical highs in the first half of 2025, supported by strong cross-border investment demand [3]. - The focus on AI technology applications and cross-border business will enhance service efficiency and asset pricing capabilities, helping to escape the homogenization of competition [3]. Group 3: Valuation Recovery Potential - The current valuation of the securities sector remains relatively low, with a projected net asset return of around 7.2% for 2026, indicating significant room for valuation recovery [4]. - The capital market is undergoing profound changes, with increased attractiveness of equity assets in a low-interest-rate environment, suggesting a positive development cycle ahead [4]. - Improved liquidity and favorable policies are expected to further enhance the valuation of securities stocks as the market improves [5]. Group 4: Investment Opportunities - The securities sector is anticipated to undergo a reshaping of its landscape, with a focus on leading firms with international capabilities and comprehensive service advantages [5]. - Mid-sized and large securities firms that can achieve leapfrog development through mergers and acquisitions are also expected to present investment opportunities [5].