What is the right course of action?

Your answer is fully correct. When approaching a stop sign with a stop line and a cyclist present, you must first come to a complete stop exactly at the stop line. This is important because stopping before the line ensures you do not enter the intersection prematurely.

Next, you have to allow the cyclist to proceed before you turn left. Cyclists have the right of way when they are crossing or continuing straight, so you must wait until it is safe and the cyclist has passed before making your turn.

You cannot turn in front of the cyclist because that would create a dangerous situation and violate right-of-way rules. Always stop at the line and yield to all road users who have priority, such as cyclists or pedestrians, before making your maneuver.

This approach keeps intersections safe and orderly in accordance with German traffic regulations.