DESPITE having to lower prices for the next batch of 128 flats in the fourth phase of Laguna City because of poor market sentiment, it still looks as if Cheung Kong (Holdings) has made the right decision in buying out Shell's 50 per cent interest in the project. In April last year, it paid the international oil giant $3.86 billion, or $1,500 per square foot (excluding any development costs), for its share in the fourth phase development. Even with a lower asking price of $5,340 a square foot, it looks as if Cheung Kong will make a profit, albeit a significantly reduced one. The fourth phase, with a gross floor area of 2.6 million sq ft, had been equally owned by Cheung Kong and Shell, which had owned the site of that phase. The anticipated total development cost of the fourth phase, including land value, construction and interests payments, was about $2,000 a square foot, so Cheung Kong would not have generated the same profit ($1,500 a square foot) as Shell unless it sold the phase four flats for at least $5,000 a square foot. Yesterday's announcement by Cheung Kong, and its last sale of Block 11 in phase four in September for more than $5,800, has swept away some analysts' worries. They had been half expecting Cheung Kong chairman Li Ka-shing to announce an even lower price. However, the price set cannot be described as a clever move because the current selling price is not a big margin over the $5,000 level. Moreover, there are some things that are not accounted for, such as Cheung Kong's interest cost for the $3.86 billion in cash payments and the sales risks in the present market. The current selling price of $5,340 per square foot has already been accepted by the market, so property analysts said the sale would not lead to a readjustment of Cheung Kong's 1995 earnings forecast, which was expected to be $11 billion to $12 billion. But the forthcoming sale of Kingswood Villas in Yuen Long, one of Cheung Kong's major sources of income, will be considered as the major test of the group's future profitability. Given weak market sentiment, property analysts mostly predicted a disappointing response.