$china automotive systems(CAAS)$ πΉπ π €π π π π ’π π
π¨π³ππ $CAAS: Breakout Bonanza ~ Why This Chinese Auto Gem Is Set to Soar πππ¨π³
Iβve been analysing $CAAS, a standout in the Chinese automotive sector listed on NASDAQ, and Iβm genuinely exhilarated by the technical setup on this chart, especially with the latest price action unfolding. As of 28Mar25 NZ time π³πΏ, the stock is trading at $5.18, having just pulled back slightly from its recent 52-week high of $5.1676, which I see as a healthy consolidation before the next leg up. The chart is showcasing a textbook cup and handle pattern, a formidable bullish continuation structure, with a well defined consolidation phase following that sharp rally earlier in the year. Iβm convinced this breakout above the $5.24 resistance level, which weβve already seen tested, is the real deal. The green lines on the chart attached show my clear price targets π―. I firmly believe weβre on track to hit $6.17, aligning with the prior highs, and if momentum holds, we could see a push towards the $9.00, $10.00 range, as indicated by the upper resistance line, a level that also aligns with valuation projections suggesting a best case scenario above $10.82.
Iβll break down why Iβm so enthusiastic about China Automotive Systems, Inc. (CAAS). This company, a leading supplier of power steering components and systems in China, is firing on all cylinders. Their Q3 2024 results delivered a stellar 19.4% year over year revenue increase to $164.2 million, demonstrating their ability to seize market opportunities despite industry challenges. Their vertically integrated model ensures tight control over production, driving cost efficiencies and fostering deep relationships with top tier automakers like BYD, Stellantis, and Mahindra & Mahindra, Stellantis alone contributed 17.2% of their sales in 2023. With a diversified portfolio spanning 15 automotive segments and a strategic focus on electric power steering (EPS) and steer by wire technology, CAAS is perfectly positioned to capitalise on the global shift towards electric and autonomous vehicles.
Financially, CAAS is a fortress. As of 30 September 2024, theyβre sitting on $138.8 million in cash and cash equivalents, exceeding their market cap of $124 million at the time. Their accounts receivable stand at $314.2 million, with accounts payable at $271.8 million, reflecting disciplined working capital management. With minimal debt and a prudent approach to capital allocation, theyβre well equipped to navigate economic cycles while pursuing growth opportunities. The special dividend of $0.80 per share, declared in July 2024 to mark their 20th anniversary on NASDAQ, a $24.1 million payout, underscores their robust cash flow and commitment to delivering value to shareholders, which I find incredibly compelling.
Valuation wise, CAAS is an absolute bargain. At $5.18, the stock remains undervalued, with a trailing P/E of 4.18 and a forward P/E of 14.88 as of early March 2025, per Yahoo Finance. Their historical EPS growth of 46% per year over the past five years far outpaces the 17% average annual share price increase, suggesting the market has been overly cautious, but I believe that sentiment is shifting rapidly. High insider ownership of over 67% further reinforces my confidence, as it shows management is deeply invested in the companyβs success.
Fairly recent developments only solidify my view. On 07Jan25, CAAS announced that their subsidiary, Shashi Jiulong, received customer awards from major OEMs Beiqi Foton Motor and Shaanxi Automobile Heavy Truck, highlighting their strong foothold in the commercial vehicle space. Their Q4 2024 earnings, are released today, 28Mar25, are expected to show revenue of $150.5 million and earnings of $0.16 per share, per Finnhub. While the actual earnings arenβt reflected in the provided data, the stockβs price action at $5.18 suggests the market has responded positively, and Iβm confident theyβve maintained the momentum from Q3.
Of course, there are risks to consider, small market cap, or small crap as a friend likes to refer to them, limited liquidity, and exposure to Chinaβs regulatory and supply chain dynamics, not to mention potential U.S. auto tariffs looming on the horizon. But with diversified revenue streams, a rock solid balance sheet, and strategic positioning in high growth areas like EPS, Iβm convinced CAAS has the resilience to overcome these challenges. This setup, paired with the chartβs clear technical signals, has me firmly in the bull camp, and Iβm backing this stock to deliver substantial upside in the months ahead. Itβs definitely on my watchlist!
π’ Please Like, Repost, and Follow me for sharp setups, stock trends, and actionable insights ππ Iβm all about spotting the next movers and sharing strategies that deliver results! Letβs trade smarter and grow together! πππ
Happy trading ahead! Cheers BC πππππ
@TigerWire @TigerStars @TigerPicks @TigerGPT
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Looks like a great set up for a swing, albeit high risk BC π
I will keep it on my radar, it has good momentum in the long term, even after earnings π
Great article, would you like to share it?
Great article, would you like to share it?
Great article, would you like to share it?
Great article, would you like to share it?