Sale of Millennium Seoul Hilton aborted. The KRW 468.6b sale of Millennium Seoul Hilton byCity Developments Limited’s (CDL) 53.5%-owned Millennium & Copthorne Hotels plc (M & C) toKangho AMC Co. (Kangho) has been aborted, as Kangho was not able to finalise its financingarrangements. This was despite M & C having extended the completion date previously to 28Nov 08 on 29 Sep 08. Although this means that M & C will not able to book in a pre-tax gain of£155.0m for its 4Q08 financials, it would be recognising an additional non-refundable deposit ofKRW 1.0b paid at the end of Oct 08, in addition to keeping KRW 58b worth of forfeited non-refundable deposits paid by Kangho on 24 Jun 08.

Asset monetization environment toughens. Just last week, we witnessed the collapse ofCapitaLand’s sale of its 30% stake in Menara Citibank. This aborted sale bears further testamentto the continued credit squeeze. For companies with unimpressive balance sheets and operatingperformance (Kangho sat on a debt of 241b won and generated a net loss of 15.4b won in 2007),the difficulty to obtain finance is even higher. Looking forward, it is unsurprising to find continuedstrains within the asset monetisation environment, from our view.

Minimal impact, fair value inches lower, maintain NEUTRAL at S$5.49. Our latest end-FY09RNAV has assumed the completion of this transaction, which would see CDL recognising its53.5% share of the pre-tax gain. In light of the sale’s abortion, we have now removed this gain,as well as accounting for the additional non-refundable deposit. Our base case end-FY09 RNAVnow falls to S$10.97 (previously S$11.05). Sticking to our previously assumed 50% discount, ourRNAV-pegged fair value for CDL inches lower to S$5.49 (previously S$5.53). MaintainNEUTRAL.