Zetrix AI: Mounting Red Flags Cloud 2027 Bond Repayment

Recent Developments

A series of adverse developments over the past fortnight has materially raised the risks to Zetrix AI's ability to refinance its 2027 bond maturity:

• 28 September 2026: External auditor TGS TW PLT resigned.

• 2 October 2026: The Straits Times reported that Zetrix AI owes the government more than RM200 million in unremitted payments collected on behalf of road transport department (JPJ) for road tax, driving licence renewals and traffic summonses. The arrears reportedly accumulated since the start of its three-year JPJ contract in May 2023.

• 5 October 2026: Per Ministry of Transport JPJ suspended MYEG and Zetrix AI as its revenue collection agents following RM314 million of outstanding government collections between 19 May and 30 September 2026. A RM231 million cheque issued to settle the outstanding amount was not processed by the bank following instructions from the companies. MOT/JPJ will pursue legal action to recover the funds, raising concerns over Zetrix AI’s liquidity, cash flow management and 2027 bond refinancing capacity.

• 5 October 2026: JPJ suspended MyEG and Zetrix AI as collection agents, citing non-compliance with contractual terms and unresolved obligations. Zetrix AI has since confirmed it is in discussions with JPJ to resolve the matter.

Previous View

In our October 2025 credit update, we adopted a cautious stance on the issuance, citing uncertainty over the scalability, monetisation and earnings contribution of the Group's blockchain platform.

Previous article: Credit Update: Zetrix Moderate Refinancing Risk Ahead and strategic pivot into Blockchain | Bondsupermart

Areas Pending Clarification

In addition, there are several areas identified recently that remain unclear and are pending clarification from the management:

1)    The Group reported approximately RM95.7 million of other payables and accruals, comprising trade payables, deposits received and accruals. This appears significantly lower than the over RM200 million outstanding amount reported in relation to JPJ. While the nature and accounting treatment of the reported JPJ amount have yet to be clarified, the apparent discrepancy raises concerns over the integrity and transparency of the Group’s financial disclosures.

2)    Decline in the share price could affect access to funding and increase financing costs, making future refinancing more challenging.

3)    Further changes in co-founder Wong Thean Soon’s shareholding could affect his position as the group’s single largest shareholder. A breach of the relevant bond covenant could result in an earlier redemption requirement, subject to the bond terms.

There’s also the issue of development costs under non-current assets amounted to approximately RM2.8 billion, but accumulated amortisation was only approximately RM147 million.

Although we are still seeking for further clarifications from the issuer team pertaining the discussion(s) above, given the severity of the issues highlighted above, we are turning negative on Zetrix ability to repay the 2027 bonds as usual.

The 3Q2026 results, expected in late November, should provide greater clarity on these issues.

Our View

Given the recent auditor resignation, JPJ suspension and reported RM200 million outstanding obligation, we see heightened concerns over Zetrix AI’s liquidity, transparency and ability to refinance its 2027 bond maturity.

Although we are still awaiting clarification from the issuer, the severity of these developments leads us to turn negative on Zetrix AI's ability to repay the 2027 bonds as scheduled.

Investors may consider disposing of the bond given the elevated refinancing and credit risks (Table 1). We will continue to monitor developments closely and provide updates as more information becomes available.

Table 1: Existing Zetrix Bonds Under Coverage