MARC Ratings has placed its AA-IS rating on Zetrix AI Berhad’s Islamic Medium-Term Notes (IMTN) Programme of up to RM2.0 billion on MARCWatch Developing.
The rating is placed on MARCWatch Developing amid concerns over a substantial reduction in shareholding of founder Wong Thean Soon (TS Wong) in Zetrix AI to 12.1% (direct: 6.5%; indirect: 5.6%) from 30%, largely triggered by margin calls. The now much smaller shareholding has reduced his shareholding buffer to comply with a positive covenant under the IMTN Programme, which requires him to remain as the group’s single largest shareholder.
MARC Ratings is also assessing Zetrix AI’s borrowings that rose to RM2.2 billion as at end-June 2026 from RM160.5 million in 2021, that have been channelled towards development spending on its AI-related services and blockchain platform. Since the commencement of its blockchain development in August 2021, cumulative development expenditure has increased to RM3.7 billion as at end-June 2026 from RM322.5 million in 2021, representing 56% of total assets. While the group continues to generate healthy operating cash flows, its debt-to-equity ratio increased to 0.50x in 1H2026 (2021: 0.10x), although the impact of the rapid increase in borrowings on leverage has been partially moderated by private placement exercises and growth in retained earnings. Leverage could increase further to support the group’s continued investments in robotics, and the consolidation of its Philippines venture following the memorandum of understanding signed on 7 July 2026 to develop public blockchain infrastructure in the country using the Zetrix blockchain platform.
While revenue from blockchain and AI-related services has been on an uptrend since the group began commercialisation in 2023, MARC Ratings is cognisant of the need for timely scalability of the business to be commensurate with the capital deployed.
MARC Ratings will reassess and take appropriate rating action as necessary when the sell down situation stabilises, given that further reduction in the founder’s shareholding could lead to a covenant breach. Additionally, the rating agency is assessing the impact of a further significant increase in borrowings to fund continued development expenditure on the group’s balance sheet and earnings leverage over the near-to-medium term. MARC Ratings will resolve the MARCWatch Developing placement upon obtaining more clarity on the stability of shareholding and the earnings trajectory, which would continue to support debt coverage metrics that are in line with the current rating.