Centuria Capital Group's (ASX:CNI) current AU$1.9 billion market capital fails to capture the growth potential of its Sovereign AI subsidiary, ResetData, Jefferies said in a Monday note.
Although ResetData currently operates at a loss and is not expected to break even until fiscal 2029, a planned capacity expansion to 13 megawatts from 1.1 megawatts could change its financial profile, the financial services firm said.
The expansion is expected to generate roughly AU$147 million in annualized revenue and AU$63 million in earnings before interest, taxes, depreciation, and amortization.
Applying the valuation framework from global Neocloud peers yields a potential enterprise value for ResetData of between AU$404 million and AU$5.3 billion.
However, the figures rely on a range of assumptions and do not explain how the company will fund the required capital for growth, according to Jefferies.
The company currently owns only 50% of the business, but it retains a five-year call option to secure full ownership by 2029.
Jefferies reaffirmed its buy rating and AU$2.50 price target on Centuria Capital Group.
Centuria Capital Group shares fell nearly 1% in midday trade Tuesday.