CHINA Railway Group said yesterday it raised 22.44 billion yuan (US$3 billion) in its Shanghai share sale after attracting a record subscription for a mainland initial public offering.

The state-run construction contractor sold 4.675 billion A shares in the Shanghai IPO by setting the offer price at 4.8 yuan per share, at the top end of an indicative range due to strong demand, according to a filing to the Shanghai Stock Exchange.

China Railway's Shanghai IPO had attracted 3.383 trillion yuan from both institutional and retail subscriptions, slightly exceeding the previous record of 3.378 trillion yuan frozen by PetroChina Co's Shanghai IPO last month.

The Beijing-based construction contractor is expected to benefit from China's rapid expansion in railway, and other transport infrastructure such as roads and bridges, analysts say. China plans to spend 1.25 trillion yuan in railway construction during the five years through 2010, the government has said.

"China Railway has very few competitors in its industry domestically," a Guodu Securities Co report said. "It has absolute advantage in winning contracts for those large projects which could net higher profit margins."

China Railway's IPO price is 26.7 times its estimated 2007 earnings, based on domestic accounting standards, according to its filing.

This compares to the average price/earnings ratio of 28 times for construction firms listed on the A share market, according to Guotai Jun'an Securities. China Railway should enjoy a premium of 15 to 30 percent to the average multiple given its leading position, it said.

China Railway is the world's third largest construction firm and Asia's largest. The firm's other revenue sources include engineering equipment manufacture, construction design and consulting, real estate development and mining.

Guodu Securities has a target price for its A share of between 5.25 yuan and 6.3 yuan. Founder Securities Co gives a similar range, valuing the stock at a range between five yuan to six yuan.

China Railway is expected to list in Shanghai on December 3.