Broker's Take: How much higher can The Stratech Group go?

SHARES of The Stratech Group, which was queried by Singapore Exchange at the start of the week after its shares rallied in heavy trade, continued to extend their gains on Wednesday.

At 01:51pm, the shares were trading at S$0.034 each, up 0.3 cent, or 9.68 per cent. More than 29 million shares changed hands, making them the second-most actively traded after commodity trader Noble Group.

The company - restructured from Stratech Systems Ltd in April - had told the regulators that it was unaware of any undisclosed information that could explain the 36 per cent surge in its share price on Monday.

In a report on Wednesday, Phillip Securities Research said the group's iFerret - a surveillance and foreign object and debris (FOD) detection system - appears to be gaining traction with new contract wins. One was for the installation at Hong Kong International Airport and the other was for an upgrade at Singapore Changi Airport. The iFerret also displaced the incumbent system at Dubai International Airport last year.

The research house noted that aviation safety is coming under greater scrutiny.

"Recent aviation tragedies will likely place pressure on aviation authorities to tighten up on safety," analyst Richard Leow said. "Adoption is inevitable, just a matter of time."

"Contingent on the successful adoption of the iFerret globally, Stratech's stock value could range from 4.0 cents (steady state) to 6.9 cents (high-growth stage) based on P/B (price to book) valuation methodology," Mr Leow said.