In a matter of just over a month, a perfect storm has pushed Zetrix AI Bhd to the precipice of corporate oblivion. In the process, the digital services firm’s share price has crashed by over 90% and its market capitalisation has plummeted by over RM5 billion.
The collapse of its shares started on Aug 27 when it opened at 66 sen, with the company valued at about RM5.33 billion. By the end of the day, the company formerly known as My EG Services Bhd had fallen nearly 10% to 59.5 sen.
The next day, the dam broke when the shares suffered a intraday plunge of 50.4% to close at 29.5 sen, erasing RM2.4 billion from its market value.
The monumental collapse was attributed to speculation linking it with the corruption case of former human resources minister M Saravanan as well as forced selling of the shares of its co-founder and group managing director Wong Thean Soon.
Things got progressively worse with the share price falling like a rock as the bad news piled up. On Oct 5, the Road Transport Department (JPJ) suspended Zetrix and its subsidiary MyEG Sdn Bhd as collection agents over unremitted government revenue.
Transport minister Loke Siew Fook then dropped the bombshell that Zetrix failed to remit RM314 million in collected government revenues.
This prompted the police to open an investigation into the matter, with the Malaysian Anti-Corruption Commission (MACC) also jumping into the fray.
The troubles afflicting Zetrix put it firmly in the crosshairs of rating agencies. On Oct 18, 2026, MARC Ratings downgraded its RM2 billion sukuk (Islamic bonds) programme rating to BB+IS from AA-IS.
The stock then tumbled on news of a potential covenant breach looming over the sukuk programme. Under its trust deed, Wong is required to remain Zetrix’s single largest shareholder.
However, his stake has been slashed to just 1.84% currently from nearly 30% following forced share sales by banks triggered by margin calls. The sukuk trustee has given Zetrix until Oct 22 to remedy the issue, which seems highly unlikely given Wong is no longer a substantial shareholder.
This means it needs to seek sukuk holders’ approval for a waiver if the breach is not resolved by then. Without a waiver, the breach could trigger early repayment of the RM2 billion principal as well as RM164.5 million in future coupon payments.
Any default of the sukuk will trigger a Practice Note 17 (PN17) classification. That would be catastrophic for Zetrix.
To aggravate matters, the company announced it was withdrawing its first interim dividend of 0.25 sen per share (amounting to RM19.7 million) for FY2026 declared two months ago to “conserve cash”.
In the face of all the bad press, Zetrix’s share price hit an intraday low of 5 sen last Friday (Oct 16), its lowest level in over 14 years, valuing the company at RM404 million. The stock is within touching distance of its all-time low price of 3.5 sen, which was reached in 2008.
Zetrix’s paradox
Ironically, Zetrix should be trading nearer to its all-time high than its record low, based on its financial results.
For the year ended Dec 31, 2025 (FY2025), its net profit hit RM883.85 million, a 24.9% rise from the previous year, while revenue jumped 31.3% to RM1.34 billion.
Just two days before Zetrix’s selloff started end-August, MBSB Research forecast it would hit RM1.1 billion in core earnings for FY2026.
MBSB noted Zetrix’s normalised earnings for the first half of 2026 jumped 38.9% to RM540.7 million, and was on track to achieve the RM1 billion earnings milestone.
On the face of it, companies having such strong financial performance should not be trading at 5 sen. That is the paradox facing Zetrix.
Its financials are the not the problem, rather it is a crisis of confidence. For Zetrix, restoring confidence in the company is paramount.
Under Wong’s leadership, the group realised its e-government services business model was inherently risky as the need for such a “middleman” was untenable in the long run. The expansion of the MyJPJ app signals the government is increasingly capable of providing digital services directly.
Its name change last year to Zetrix from My EG is a reflection of its strategy of transforming itself from an e-government services provider into a blockchain and artificial intelligence (AI) company.
Its robust financial performance in recent years can be attributed to this transformation. Blockchain and AI-related revenue increased from RM127.6 million in 2023 to RM362.8 million in 2024, and RM643.5 million in 2025.
Its first half FY2026 earnings of over half a billion ringgit was supported by AI subscriptions and services, Web3 application fees and sales of Zetrix Layer-1 nodes. Nevertheless, non-AI and non-blockchain activities still account for about 40% of group revenue.
However, this transformation seems to have become its achilles heels as it has racked up huge debt to roll out the new business.
By end-June 2026, cumulative development expenditure had reached a whopping RM3.7 billion from RM2.85 billion at end-2025. That expenditure is likely to continue growing.
At end-June, Zetrix had RM541.6 million in cash and cash equivalents against RM853.1 million in short-term loans and borrowings. Total borrowings stood at RM2.2 billion, up 74.3% from RM1.26 billion a year earlier.
Its current financial woes may well be linked to the burgeoning debt to finance its investment in blockchain infrastructure, AI applications and international expansion. The question remains whether Zetrix has bitten off more than it can chew?
While the transformation appears to be bearing fruit with rising revenue and earnings, investors and financial institutions want to know if these are recurring and sustainable, given the huge investment involved.
Last throw of the dice
Zetrix may have a trump card to deal with its rising debt and cashflow issues as it is preparing to list its AI and blockchain unit, AI Foundation Lab, on the Nasdaq by end-2026. The plan is even backed by a US$40 million (RM163 million) equity investment from International Finance Corp, the World Bank’s investment arm.
The company is targeting a valuation of US$3 billion (RM12.2 billion) alongside a US$200 million (RM816.3 million) capital-raising exercise before the listing, according to a CLSA note. It plans to eventually pare down its stake in the US-listed company, with proceeds to be used to reduce its debt, and potentially pay a special dividend.
However, these projections were done prior to the brutal selloff, which has thrown a spanner into the works. MARC said its proposed Nasdaq listing could be deferred to the first quarter of 2027 from its initial end-2026 target.
“While the proposed listing could broaden the group’s access to capital, recent developments affecting its business and financial profile could present challenges to its completion,” it said.
It added Zetrix’s reliance on “transactions that remain subject to execution risks” offered limited assurance that funds would be available in time for debt repayment.
This potential Nasdaq listing may well be the last throw of the dice for Wong and Zetrix. If it is executed successfully, they may well be able to prevent the company from falling off the precipice.
The views expressed are those of the writer and do not necessarily reflect those of FMT.