How Zetrix bet on its future and lost two-thirds of its value

Zetrix AI Bhd experienced a dramatic 67% decline in its share price within a four-day span, resulting in a market value loss of RM3.55 billion. This downturn occurred between August 27 and September 2, following the company's share buyback program that took place from January to August. Zetrix had purchased nearly 123.29 million shares during this period, investing approximately RM94.2 million in the process.

Despite these buybacks indicating confidence in the company's prospects and the potential to boost shareholder returns, the company's managing director, Wong Thean Soon, and his private holding Asia Internet Holdings Sdn Bhd, sold shares at a loss during this turbulent period. On August 28, Wong sold 99.8 million shares at 29.9 sen per share, contributing to a massive RM57.5 million worth of shares being offloaded as the stock price plummeted.

The management's actions cast doubt on their confidence in the company's future, as Zetrix's share price had not fallen below 60 sen prior to August 27. The company's market value had already decreased significantly over the year, with the stock price falling below its historical valuation by August 27. The subsequent share-price collapse further widened the gap between Zetrix's valuation, pushing the trailing P/E ratio to 2.2 times, an 84% discount from its five-year average of 13.9 times.

The decline was exacerbated by speculation linking the company to former human resources minister Datuk Seri M Saravanan, who faced corruption charges on August 28. Despite categorically denying involvement, Zetrix's market capitalization plummeted from RM6.53 billion to about RM1.65 billion, a 74.7% loss in market value by September 3.