广发证券 (1776.HK): Earnings review: Asset management strength and overseas expansion support medium-term ROE improvement; Buy GFS-A

GFS delivered another strong quarter, supported by investment gains, improving balance-sheet utilization and resilient asset-management earnings. While investor focus has centered on the sustainability of investment income following a record quarter, we believe the more important takeaway is that the company's ROE improvement is increasingly supported by structural drivers, including international expansion, capital deployment and recurring fee-based businesses. We therefore continue to view GFS as one of the better-positioned traditional brokers to benefit from overseas expansion and improving capital efficiency. Following the results, we raise our 2026-28E revenue/NPAT forecasts and our H/A share target prices, reflecting stronger investment income assumptions, faster overseas earnings contribution and improved leverage utilization. We view international expansion as the most important medium-term earnings driver, with the upcoming capital injection supporting derivatives, client-dri