Numbers

The Numbers — Zetrix AI Berhad

Zetrix AI trades like a cheap, cash-rich government contractor — single-digit P/E, 27% ROE, 74% operating margin, net profit compounding 27% annualized since FY2020 — yet the market prices it as if those numbers are about to break. The single variable most likely to re-rate or de-rate the stock is whether the July 2025 Bursa Malaysia reprimand and the Zetrix blockchain segment's disclosure overhang get resolved; if they do, the gap to a "normal" 16x Asian professional-services peer multiple becomes the dominant story.

Snapshot

Quality scorecard — is this a durable business?

Because the standard Quality Score / Fair Value feed is unavailable for Bursa Malaysia, this scorecard reconstructs the same idea from reported fundamentals: margins, coverage, liquidity, cash conversion, and the external credit opinion from MARC Ratings.

The fundamentals read like a high-quality compounder. The governance flag is what keeps the multiple half of where the numbers argue it should be.

Revenue and earnings power — five-year arc

Margins have stair-stepped from roughly 50% to 74% in five years as high-margin Zetrix blockchain and digital-ID revenue crowded out lower-margin e-government services. The FY2022 revenue dip reflects the expiry of some pandemic-era mandatory disclosure contracts; margin expansion resumed immediately after.

Cash generation — are the earnings real?

Operating cash flow ran below reported earnings in FY2021-FY2022 (working-capital build around the Zetrix transition), then flipped to consistent conversion above 100% from FY2023 onwards. Trailing five-year FCF / Net income is roughly 104% — reported profits are fully backed by cash.

Capital allocation

Dividends jumped 2.6x in FY2025 to RM212m as FCF scaled; cumulative treasury buybacks now total roughly 282m shares (182m in 2021, 100m in March 2025, plus a 3.5m block printed on 3 April 2026). Payout ratio remains a conservative 26-30%.

Balance sheet — leverage manageable, still net-debt

Net debt / EBITDA has held in a 1.1x-1.5x band while absolute debt scaled alongside the RM2.0B Islamic Medium-Term Note programme (MARC rated AA-IS, affirmed October 2025). The step-up in FY2022 was capacity build for Zetrix; cash coverage of short-term obligations remains a 7.3x current ratio.

Valuation — today vs recent history and peers

This is the critical section. The table compares current multiples to where the company traded during the MYEG-era FY2020-FY2023 and to Asian professional-services peers today.

At 7.3x trailing earnings the stock sits more than one standard deviation below its own multi-year average and roughly half the Asian professional-services peer median of 16.2x. Four independent fair-value anchors — DCF, fair-P/E reversion, analyst average and analyst high — cluster in a RM1.50-2.00 range, implying 80-140% upside if the governance overhang clears.

Peer comparison

Zetrix is the largest, most profitable and best-capitalised operator in its Malaysian peer group yet trades at the lowest multiple of any profitable name in the table. The gap to CTOS (19x, overlapping customer base) is the cleanest mispricing.

Fair-value scenarios

Closing

The numbers confirm an exceptional operating business — 74% operating margins, 27% ROE, a five-year net-profit CAGR of 27%, FCF conversion above 100%, and manageable leverage backed by an AA-IS credit rating. The numbers contradict the market's pricing: at 7.3x earnings, Zetrix is valued like a declining contractor rather than the compounder its fundamentals describe, and even the governance-aware analyst consensus of RM1.52 sits 82% above spot. What to watch next is twofold — resolution or escalation of the Bursa reprimand and any follow-on IMTN rating action, and whether 1H FY2026 can hold operating margin above 70% as the Zetrix revenue mix scales. A margin compression back toward 60% would undo much of the re-rating case.