China Aviation Oil

China Aviation Oil: entered into agreements with its parent co, China National Aviation fuel Group Corp (CNAF) to acquire CNAF’s wholly owned subsidiaries, China Aviation Oil (HK) and North American Fuel Corp (NAFCO) for a total consideration of ~US$16m. Mgt says, the acquisitions expand its geographical reach, and are inline with its strategy to establish a global trading network by 2014.

CAOHK, to be acquired for ~US$12m, is involved in the business of jet fuel trading and supply of jet fuel to airline companies at various airports including HK, London, Taiwan and domestic airports in the PRC.
NACFO, to be acquired for ~US$4m, is an agent and wholesaler of jet fuel in the US. It commenced its agency business for local fuel suppliers and major Chinese airlines since Jan ’11.

Technically the stock looks like it could be starting on a new uptrend, after breaking out of the long term downtrend line convincingly at the beginning of this year. Volume, though light, has been increasing with signs of accumulation evidenced by the rising OBV.
Near term, see resistance at $1.10 (just above the 50day MA), though we highlight the stock could be a potential breakout play above that level. RSI and MACD are looking positive, even though Stochastics are in overbought territory. Pullbacks toward $1.05 may offer entry opportunities.