Daily news - 16 Sep

CapitaLand's one-north investment costs more
CapitaLand – Said that its investment in one-north hub will now cost $476.8m - up from $380m announced in September 2007 - because of rising construction costs. CapitaLand will own and manage a retail and entertainment zone called the hub at Vista Xchange at JTC's one-north. Partner New Creation Church's Rock Productions, which will own and manage a civic and cultural zone, will invest $499.5m in that project - up from $280m announced last year. Rock's increase is partly due to a planned increase in gross floor area (GFA) at the civic and cultural zone. The zone will now have a GFA of 38,000 square metres, up from 'over 30,000' sq m announced previously. The new investment figures mean that the hub will now cost $976.3m, up from $660m announced in September 2007. CapitaLand and Rock yesterday said that they have awarded a $633m contract for construction of the hub to Hexacon Construction Pte Ltd. The project is expected to be completed by mid-2012. CapitaLand said that despite the higher cost, its projected return will remain the same.

SIA Cargo inks $500m deal with Pratt & Whitney
Singapore Airlines Cargo - Has signed a 10-year, $500m fleet management deal with Pratt & Whitney Global Service Partners. The agreement covers engine maintenance for 13 Boeing 747-400F cargo aircraft powered by Pratt & Whitney PW4000-94 engines, as well as six spare engines. SIA Cargo is one of the world's largest operators of B747-400 freighters, with a network that covers 76 destinations in 38 countries. The wholly owned Singapore Airlines subsidiary, which took over its parent's cargo business in 2001, is ranked fourth worldwide in terms of international freight tonne-kilometres. Pratt and Whitney is a leading player in the aviation maintenance and repair industry. SIA Cargo flew back into the black with a $5m profit for FY07/08 - a $16m reversal from an $11m loss the year before. In recent years, its fleet has been gradually boosted by SIA's B747 freighter conversion programme.

SIA passenger, cargo loads decline in Aug
Singapore Airlines - Softening travel demand and increase in capacity saw SIA fill 79.4% of its seats in August, down from 81.6% a year earlier. The airline's cargo loads dipped 1.2 percentage points year on year to 61%, from 62.2% in August 2007. Overall load factor dipped 1.2 percentage points to 68.2%, from 69.4%. During the month, the airline recorded a 5.3% rise in year-on-year growth in systemwide passenger carriage (measured in revenue passenger kilometres) while capacity (measured in available seat kilometres) grew by 8.2%. The number of passengers carried continued to rise by 2.2% over the same month last year, to 1.66m. SIA said all route regions recorded declines in PLF (passenger load factor) and this was mainly due to the new capacity introduced not fully met by the increase in passenger traffic. It added that softening demand due to the weak US economy contributed to the lower PLF in the Americas routes region.

Olam pumping US$128.4m into Nigerian ventures
Olam Imternational - Will be investing US$128.4m in a sugar refinery and a wheat mill in Nigeria. Olam said yesterday that it will take on these investments through a strategic partnership with the Modandola Group (MG). MG is a Nigerian conglomerate with interests across the shipping, agriculture, real estate and other sectors. Olam will form a joint venture (JV) with MG to set up the sugar refinery and sink in US$91m for a 49%-stake in the partnership. Olam will also acquire a 49%-stake in the MG-owned Standard Flour Mills for US$32.5m, and put in another US$4.9m to raise operating capacity. Both transactions will be funded from borrowings, internal accruals and proceeds from Olam's recent capital raising. The sugar refinery will have a captive port in Lagos and Olam will undertake project management for setting it up. Olam will also handle overall operational activities such as sales and distribution, while MG will look after local support services and relationship management with local regulatory agencies. The sugar refinery will incur a total capital cost of US$190m across FY2009 to FY2011. Production is expected to start in January 2011, reaching full capacity by FY2013.

Source: Kim Eng