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Formed in 1964, MOL is one of Japan’s “big three” shipping companies alongside Nippon Yusen (NYK) and Kawasaki Kisen (K-Line).

Today the group provides global marine transportation, storage, and integrated logistics across dry bulk, tankers, LNG/LPG carriers, car carriers, and offshore/energy-related vessels. MOL owns one of the world’s largest overall shipping fleets, operating over 500 vessels directly across these segments. As well as this, MOL also owns a 31% stake in Ocean Network Express (ONE), the container-shipping joint venture formed in 2017 with NYK and K-Line, which operates roughly 200 additional container ships and ranks among the world’s top container carriers.

Shipping is notoriously cyclical and capital intensive with long asset life cycles. As such – with earnings prone to wild swings – investors often value such companies on book values. AVI’s raison d’être is to find assets where, for one reason or another, the value and quality has been obfuscated. In the case of MOL we believe this to be quite literal and the investment thesis rests on the persistent gap between MOL’s book value and the fair value of its underlying assets.

The company’s fleet of over 500 vessels sits on the balance sheet in Yen at historic cost, but Yen weakness combined with a buoyant second-hand ship market means the fleet is now estimated to be worth 2-3x book. Because ships are typically USD-denominated assets financed and depreciated in Yen, a decade of currency depreciation plus post-Covid write-downs has left accounting values far divorced from replacement or resale value. Second-hand vessel prices, especially for LNG carriers, VLCCs and capesize bulkers, remain well above pre-Covid levels amid tight shipbuilding capacity, reinforcing the scale of unrecognised latent gains sitting on MOL’s balance sheet.

As well as this, there is also significant value in the form of Daibiru, MOL’s real estate arm – a company we know well having launched an activist campaign in 2021 entitled Stop Exploiting Daibiru. At cost, this stake accounted for approximately a quarter of MOL’s market cap when we started building the position, however we believe this understates the true potential value.  Daibiru currently generates returns of only around 1.3% on its property portfolio, well below what could be achieved were the portfolio housed in a REIT structure. We believe relisting it today, amid favourable real-estate valuations, could realise a multiple of that purchase price. Together, the fleet and Daibiru mean MOL’s true net asset value has been heavily discounted by the market: even with a reported price-to-book ratio of around 0.8x at the time of position initiation, the price-to-NAV was closer to 0.5x.

Three forces have converged which we believe will narrow this gap and which led us to build the position. First, a public activist disclosed a stake in March 2026, and has pushed management toward greater capital discipline, including consideration of a sale-and-leaseback structure that would crystallise the fleet’s fair value into a listed vehicle, and a potential Daibiru relisting. Second, MOL’s own “Blue Action 2035” long-term plan entered its second phase on 31 March 2026, shifting emphasis from “transformation and expansion” toward “value realisation”, with a raised ROE target of over 10%, a roughly 40% total payout ratio (progressive dividends plus flexible buybacks), and around JPY230bn earmarked specifically for future shareholder returns from real estate liquidation. Third, governance reforms, such as increased equity-based executive compensation with clawbacks, willingness to exit sub-hurdle businesses, and closer monitoring of segment-level ROE and cash flow all signal a shift toward shareholder-friendly capital allocation.

Latterly the company is also experiencing an upswing in the operating environment. In August in particular we have seen a rally in container spot rates, driven by severe port congestion (c.11% of the global container fleet tied up in queues, the worst since 2022), continued Red Sea/Hormuz rerouting, and tariff-driven frontloading of US-bound cargo. Continued strength in dry bulk and tankers added further support, with MOL’s growing Very Large Cargo Carriers (VLCCs) and LPG fleet a particular beneficiary.

The underlying driver is the effective closure of the Strait of Hormuz, which Iran has largely blocked since February 2026 following US and Israeli military strikes, at one point stranding around 20,000 mariners and 2,000 vessels. As of early September, the strait remains, in effect, shut to routine commercial transit, with only around five to six vessels a day passing through versus a normal baseline of roughly 85 pre-crisis flow.

This matters for MOL because when a major shipping route shuts down, vessels have to take longer, more expensive detours, which sharply reduces the effective global supply of ships available and pushes up the price that companies charge to move cargo (freight rates). This has fed directly into estimate upgrades well ahead of what management had budgeted, with MOL’s original FY2026 guidance assuming Hormuz normalisation by July, meaning the company continues to capture windfall economics into September. We note that FY3/27 net income estimates for MOL have been revised up some +35% YTD as a result.

Following August’s rally, the discount to our estimated NAV has narrowed from c.-50% to c.-39% and we have taken some small profits in the name following month-end. Nonetheless, we continue to see further upside for MOL over the medium term, as we expect MOL’s LNG fleet to become a materially larger earnings contributor over time. This, together with a targeted 40% payout ratio, buyback flexibility, and c. JPY230bn of planned real estate and asset recycling proceeds over the next five years, underpins our conviction that MOL can continue re-rating from its undemanding 0.8x reported book value today.

Formed in 1964, MOL is one of Japan’s “big three” shipping companies alongside Nippon Yusen (NYK) and Kawasaki Kisen (K-Line). Today the group provides global marine transportation, storage, and integrated logistics across dry bulk, tankers, LNG/LPG carriers, car carriers, and offshore/energy-related vessels. MOL owns one of the world’s largest overall shipping fleets, operating over 500 vessels directly across these segments. As well as this, MOL also owns a 31% stake in Ocean Network Express (ONE), the container-shipping joint venture formed in 2017 with NYK and K-Line, which operates roughly 200 additional container ships and ranks among the world’s top container carriers.

Shipping is notoriously cyclical and capital intensive with long asset life cycles. As such – with earnings prone to wild swings – investors often value such companies on book values. AVI’s raison d’être is to find assets where, for one reason or another, the value and quality has been obfuscated. In the case of MOL we believe this to be quite literal and the investment thesis rests on the persistent gap between MOL’s book value and the fair value of its underlying assets.

The company’s fleet of over 500 vessels sits on the balance sheet in Yen at historic cost, but Yen weakness combined with a buoyant second-hand ship market means the fleet is now estimated to be worth 2-3x book. Because ships are typically USD-denominated assets financed and depreciated in Yen, a decade of currency depreciation plus post-Covid write-downs has left accounting values far divorced from replacement or resale value. Second-hand vessel prices, especially for LNG carriers, VLCCs and capesize bulkers, remain well above pre-Covid levels amid tight shipbuilding capacity, reinforcing the scale of unrecognised latent gains sitting on MOL’s balance sheet.

As well as this, there is also significant value in the form of Daibiru, MOL’s real estate arm – a company we know well having launched an activist campaign in 2021 entitled Stop Exploiting Daibiru. At cost, this stake accounted for approximately a quarter of MOL’s market cap when we started building the position, however we believe this understates the true potential value.  Daibiru currently generates returns of only around 1.3% on its property portfolio, well below what could be achieved were the portfolio housed in a REIT structure. We believe relisting it today, amid favourable real-estate valuations, could realise a multiple of that purchase price. Together, the fleet and Daibiru mean MOL’s true net asset value has been heavily discounted by the market: even with a reported price-to-book ratio of around 0.8x at the time of position initiation, the price-to-NAV was closer to 0.5x.

Three forces have converged which we believe will narrow this gap and which led us to build the position. First, a public activist disclosed a stake in March 2026, and has pushed management toward greater capital discipline, including  consideration of a sale-and-leaseback structure that would crystallise the fleet’s fair value into a listed vehicle, and a potential Daibiru relisting. Second, MOL’s own “Blue Action 2035” long-term plan entered its second phase on 31 March 2026, shifting emphasis from “transformation and expansion” toward “value realisation”, with a raised ROE target of over 10%, a roughly 40% total payout ratio (progressive dividends plus flexible buybacks), and around JPY230bn earmarked specifically for future shareholder returns from real estate liquidation. Third, governance reforms, such as increased equity-based executive compensation with clawbacks,

willingness to exit sub-hurdle businesses, and closer monitoring of segment-level ROE and cash flow all signal a shift toward shareholder-friendly capital allocation.

Latterly the company is also experiencing an upswing in the operating environment. In August in particular we have seen a rally in container spot rates, driven by severe port congestion (c.11% of the global container fleet tied up in queues, the worst since 2022), continued Red Sea/Hormuz rerouting, and tariff-driven frontloading of US-bound cargo. Continued strength in dry bulk and tankers added further support, with MOL’s growing Very Large Cargo Carriers (VLCCs) and LPG fleet a particular beneficiary.

The underlying driver is the effective closure of the Strait of Hormuz, which Iran has largely blocked since February 2026 following US and Israeli military strikes, at one point stranding around 20,000 mariners and 2,000 vessels. As of early September, the strait remains, in effect, shut to routine commercial transit, with only around five to six vessels a day passing through versus a normal baseline of roughly 85 pre-crisis flow.

This matters for MOL because when a major shipping route shuts down, vessels have to take longer, more expensive detours, which sharply reduces the effective global supply of ships available and pushes up the price that companies charge to move cargo (freight rates). This has fed directly into estimate upgrades well ahead of what management had budgeted, with MOL’s original FY2026 guidance assuming Hormuz normalisation by July, meaning the company continues to capture windfall economics into September. We note that FY3/27 net income estimates for MOL have been revised up some +35% YTD as a result.

Following August’s rally, the discount to our estimated NAV has narrowed from c.-50% to c.-39% and we have taken some small profits in the name following month-end. Nonetheless, we continue to see further upside for MOL over the medium term, as we expect MOL’s LNG fleet to become a materially larger earnings contributor over time. This, together with a targeted 40% payout ratio, buyback flexibility, and c. JPY230bn of planned real estate and asset recycling proceeds over the next five years, underpins our conviction that MOL can continue re-rating from its undemanding 0.8x reported book value today.