What happened
　　On September 18, Legend announced it has entered intotwo Framework Agreements with Sunac China to sell itsproperty development arms for a consideration of Rmb13.8bnand EnsenCare for a consideration of Rmb137mn.
　　Comments
　　Transaction brings potential NAV upside. The transaction,estimates the NAV of Legend’s property segment at Rmb18bn(Rmb11.35bn for Raycom Property Investment + Rmb4.66bn forequity interest of the disposed property – Rmb5.3bn net debt +Rmb7.3bn shareholder loan). Thus, the transaction will bringpotential upside for the NAV calculation:
　　We previously valued Legend’s property segment atRmb11.6bn using the DCF method; there will be a gain onthe valuation gap.
　　The proceeds are estimated to be Rmb12bn and will nolonger need to be discounted as it is considered as cash.
　　We estimate there will be ~12% increase in our estimatedLegend NAV if the transaction is completed.
　　Transaction still subject to approval. The deal firstly has tobe green lit at Sunac China’s shareholder meeting in December;then the HKSE has to approve the transaction. We are concernedthat some property projects might be subject to other approvalsby the PRC government. The estimated completion time is ~4months after the shareholder meeting.
　　The company hopes the deal will increase its liquidity. Onone hand, it helps the company to realize part of its propertyNAV; on the other, if the transaction is completed, Legend will beable to use the proceeds for any potential strategic investments.
　　Risks
　　Failure to recognize good investments; weak macro economy.