A Mitsui O.S.K. Lines (MOL) container ship docks at a marine terminal in Tokyo on October 31, 2016.
Akio Kon – Bloomberg – Getty Images
Shares in Japanese shipping company Mitsui O.S.K. Lines soared more than 11% to a record high on Wednesday after activist investor Elliott Investment Management said it had acquired a “substantial” stake in the company.
Mr Elliott said he was confident in the Japanese shipping company’s long track record and position as one of the world’s largest diversified ocean-going vessel owners.
“Despite this strong market position and high-quality assets, the market significantly undervalues the business,” the investment firm said in a statement, adding that it sees an opportunity to engage constructively with Mitsui & Co.’s management to ensure its next medium-term plan is sufficiently ambitious, improve market perception, and derive a higher valuation.
Mitsui O.S.K. Lines reported a slight increase in sales in its latest financial results, but a sharp decline in profits, reflecting weak earnings across its major shipping division. Sales for the nine months ended December rose 2% year-on-year to 1.35 trillion yen ($8.49 billion), but operating profit fell more than 16% to 102.7 billion yen.
This decline was due to lower profitability in several core businesses, particularly product transportation and container shipping, where lower freight rates and increased vessel supply significantly reduced profits.
The shipper’s stock price has risen more than 48% since the beginning of the year.
Elliott Investment Management manages approximately $79.8 billion in assets.
