MBSB Research has maintained its Buy recommendation on Zetrix following the group’s second-quarter financial results, but lowered its target price to RM0.90 from RM1.24, citing a more cautious valuation approach amid higher gearing from its aggressive expansion initiatives.
The research house said Zetrix’s outlook remained promising, with its e-government services providing a stable revenue base while the Zetrix platform represents the group’s key growth avenue.
MBSB expects contributions from the Zetrix platform to eventually surpass those from the group’s existing businesses once ZTrade takes centre stage.
However, the aggressive push to expand revenue streams has resulted in a significant increase in borrowings, raising concerns over the group’s capital-intensive expansion into blockchain, artificial intelligence (AI) and robotics.
2QFY26 Earnings Rise 30%
Zetrix’s normalised earnings for 2QFY26 rose 30.1% year-on-year to RM269.6 million, driven by a 38.6% increase in revenue to RM426.7 million.
The higher revenue was supported by several areas, including subscriptions and services from the group’s artificial intelligence platforms, web3 application service fees generated through the Zetrix blockchain platform, and sales of Zetrix layer-1 nodes.
The Zetrix platform’s contribution included services related to the Malaysia Blockchain Infrastructure (MBI), ZTrade, ZCert, global voting applications and Digital ID registrations and transactions.
The stronger revenue performance was partly offset by a sharp increase in depreciation and amortisation costs, which rose 463.3% year-on-year, while finance costs increased 70.7%.
1HFY26 Results In Line
For the first half of FY26, Zetrix recorded earnings of RM540.7 million, up 38.9% year-on-year, while revenue increased 33.7% to RM813 million.
MBSB said the 1HFY26 performance was broadly in line with expectations, accounting for 49.2% of its full-year FY26 earnings forecast.
The research house said the performance reflected continued growth across the group’s various revenue-generating initiatives, although rising costs and borrowings remain key considerations.
Zetrix’s borrowings increased 74.3% year-on-year to RM2.19 billion as at June 2026, compared with RM1.26 billion a year earlier.
MBSB highlighted a particularly notable increase in short-term loans and borrowings, which rose RM408.3 million, or 91.7%, with Islamic Medium-Term Notes accounting for much of the increase.
The higher borrowings were mainly attributed to investments and initiatives related to the group’s Zetrix blockchain and AI technology businesses.
MBSB said the rising gearing position warranted a more prudent valuation approach as Zetrix continues to pursue expansion across blockchain, AI and robotics.
While MBSB made no changes to its earnings forecasts, it lowered the target price by applying a more conservative 6.3 times price-to-earnings ratio, compared with 8.7 times previously.
The new multiple is around one standard deviation below Zetrix’s two-year mean of 7.8 times, reflecting the risks associated with its capital-intensive expansion strategy.
Despite the lower target price, MBSB retained its Buy call, pointing to Zetrix’s growth prospects and an attractive dividend yield of more than 6% at the current share price.
The research house said the group’s established e-government services should continue to provide earnings stability, while the Zetrix platform offers longer-term growth potential as initiatives such as ZTrade gain traction.
