Cie Automotive: From Penny Stock to 9-Euro Resistance
Cie Automotive nears 9 euros despite falling profits and sales by major shareholders like Abelló and CaixaBank.
English · Original discussion in Spanish · Published
Cie Automotive: From Penny Stock to 9-Euro Resistance
Cie Automotive, a Spanish auto parts manufacturer, is trading near 9 euros, up nearly 50% this year, yet remains a controversial pick on the continuous market. A forum user’s entry at an average price of 8.02 euros highlights the debate over this small-cap stock, which has become one of the year’s most discussed investments trinc a major deal with Indian group Mahindra.
What is Cie Automotive and why is it in the news
Cie Automotive is a group focused on automotive components, listed on the Spanish continuous market with modest trading volumes, classifying it in jargon as a penny stock. Its latest major move is an agreement with Indian group Mahindra, integrating 10 plants in India and 6 in Europe with a workforce of 10,000 people, enabling annual revenue above 2 billion euros. President Antón Pradera aims for 3 billion euros in 2017 thanks to the Asian market. The company trades in Madrid and Sao Paulo, and the deal opens the door to listing on the Bombay Stock Exchange.
The numbers, however, do not fully support the narrative. The latest known results showed net profit of 60.7 million, a 1.47% decrease from the previous year, although EBITDA rose 7.2%. In the prior year, profit fell 5.4% while EBITDA grew 2.4%, thanks to strong sales in Brazil offsetting the decline in European business.
The movement of major shareholders: Abelló and CaixaBank
Few things generate more suspicion in the stock market than seeing a historical shareholder exit. Juan Abelló completed his exit from Cie Automotive by disposing of the remaining 1.87% after months of staggered sales. Previously, CaixaBank sold the 5% it held through subsidiaries of Banca Cívica, placing the block in the company La Fuente Salada, controlled by José Ignacio Comenge. The transaction generated capital gains for the bank and, according to the most benevolent reading, peace of mind for the shareholder: less paper in the hands of forced sellers.
The other side of the coin is provided by César Alierta’s SICAV, which included Cie Automotive among its Spanish equity bets, alongside Telefónica, Adveo, and ArcelorMittal. That the former Telefónica chairman holds the stock is used as proof that there is more than a passing trend.
The resistance of 9 euros: free ride or wave ceiling?
The technical debate has been constant. The 9-euro mark has acted as strong resistance for years: the previous historical high sits at 9.24 euros, reached in April 2007. Those who scrutinize the chart argue the price is outside the bands, with bearish divergences in the last two highs and a decreasing MACD, suggesting the wave’s peak has been reached. The alternative scenario points to a correction toward 8.76 euros before resuming momentum.
On the opposite side, some argue that breaking 9 euros with volume is precisely the signal for entry into a free rise, and that the stock has room to reach 10 euros. The price range handled in recent weeks goes from 7.13 euros, the bounce at the 62% Fibonacci level, to 9.09 euros, the sales with gains. In between, 7.74 and 7.88 acted as intermediate steps.
The volume problem and strong hands
A stock that moves little paper needs strong hands to overcome long-term resistance. This is the contradiction running through the entire discussion: the forecast for sales with entry into Asia plays in favor, but without sustained institutional volume, the breakout may remain a mere threat. The day the stock fell more than 4% in early trading and closed with a 1.50% gain, with one of the year’s largest volumes, it was read as a possible omen. No one confirmed it.
The exchange rate factor and Brazilian business
Internationalization is the central argument of the bullish thesis, but also its weak point. Strong sales performance in Brazil offset the decline in European business, demonstrating that geographic diversification works. However, this same exposure means results depend on exchange rates and economic cycles beyond the company’s control. Integrating Mahindra’s plants adds scale but also operational complexity and execution risk in a market, India, with its own rules.
With the stock around 9 euros, the lingering question is uncomfortable: if net profit has fallen for two years and the value has already revalued by nearly 50%, what must happen for 10 euros to be a floor and not a ceiling?
Cie Automotive, a Spanish auto parts manufacturer, is trading near 9 euros, up nearly 50% this year, yet remains a controversial pick on the continuous market. A forum user’s entry at an average price of 8.02 euros highlights the debate over this small-cap stock, which has become one of the year’s most discussed investments trinc a major deal with Indian group Mahindra.
What is Cie Automotive and why is it in the news
Cie Automotive is a group focused on automotive components, listed on the Spanish continuous market with modest trading volumes, classifying it in jargon as a penny stock. Its latest major move is an agreement with Indian group Mahindra, integrating 10 plants in India and 6 in Europe with a workforce of 10,000 people, enabling annual revenue above 2 billion euros. President Antón Pradera aims for 3 billion euros in 2017 thanks to the Asian market. The company trades in Madrid and Sao Paulo, and the deal opens the door to listing on the Bombay Stock Exchange.
The numbers, however, do not fully support the narrative. The latest known results showed net profit of 60.7 million, a 1.47% decrease from the previous year, although EBITDA rose 7.2%. In the prior year, profit fell 5.4% while EBITDA grew 2.4%, thanks to strong sales in Brazil offsetting the decline in European business.
The movement of major shareholders: Abelló and CaixaBank
Few things generate more suspicion in the stock market than seeing a historical shareholder exit. Juan Abelló completed his exit from Cie Automotive by disposing of the remaining 1.87% after months of staggered sales. Previously, CaixaBank sold the 5% it held through subsidiaries of Banca Cívica, placing the block in the company La Fuente Salada, controlled by José Ignacio Comenge. The transaction generated capital gains for the bank and, according to the most benevolent reading, peace of mind for the shareholder: less paper in the hands of forced sellers.
The other side of the coin is provided by César Alierta’s SICAV, which included Cie Automotive among its Spanish equity bets, alongside Telefónica, Adveo, and ArcelorMittal. That the former Telefónica chairman holds the stock is used as proof that there is more than a passing trend.
The resistance of 9 euros: free ride or wave ceiling?
The technical debate has been constant. The 9-euro mark has acted as strong resistance for years: the previous historical high sits at 9.24 euros, reached in April 2007. Those who scrutinize the chart argue the price is outside the bands, with bearish divergences in the last two highs and a decreasing MACD, suggesting the wave’s peak has been reached. The alternative scenario points to a correction toward 8.76 euros before resuming momentum.
On the opposite side, some argue that breaking 9 euros with volume is precisely the signal for entry into a free rise, and that the stock has room to reach 10 euros. The price range handled in recent weeks goes from 7.13 euros, the bounce at the 62% Fibonacci level, to 9.09 euros, the sales with gains. In between, 7.74 and 7.88 acted as intermediate steps.
The volume problem and strong hands
A stock that moves little paper needs strong hands to overcome long-term resistance. This is the contradiction running through the entire discussion: the forecast for sales with entry into Asia plays in favor, but without sustained institutional volume, the breakout may remain a mere threat. The day the stock fell more than 4% in early trading and closed with a 1.50% gain, with one of the year’s largest volumes, it was read as a possible omen. No one confirmed it.
The exchange rate factor and Brazilian business
Internationalization is the central argument of the bullish thesis, but also its weak point. Strong sales performance in Brazil offset the decline in European business, demonstrating that geographic diversification works. However, this same exposure means results depend on exchange rates and economic cycles beyond the company’s control. Integrating Mahindra’s plants adds scale but also operational complexity and execution risk in a market, India, with its own rules.
With the stock around 9 euros, the lingering question is uncomfortable: if net profit has fallen for two years and the value has already revalued by nearly 50%, what must happen for 10 euros to be a floor and not a ceiling?
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (107 replies).
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