[susan53]

As before - it is impossible to make this sort of judgement about a sentence unless you quote the full context. Isolated like that, I would agree - it's not a logical continuation. But put it into a context and it easily makes sense :

Context : A fantasy novel such as Game of Thrones. The King is looking for a wife and his courtiers are trying to convince him that their daughters would be ideal.
Courtier : Your Grace knows the Lady Alayne is beautiful, and her kindness is renowned...
King : Lord Owen - I fear you jest. Although the Lady is beautiful, she is not kind. Do not delude yourself that I have not heard tales of her behaviour towards the peasants of Derne etc etc etc

I suspect though that you're confusing concession and contrast again. This seems to me to be more a case of contrast : statement of positive quality vs statement of negative quality (in the opinion of the speaker, obviously).