China Railway Group Ltd., which last year became the world's third-largest contractor in revenue, has set the price range of its A-share initial public offering (IPO) at 4.00-4.80 yuan per share. Previous market expectations were for a minimum price of 2.6 yuan.

The IPO could rise up to 22.4 billion yuan (3 billion U.S. dollars).

The price-earning ratio, based on projected 2007 net profits and an enlarged total of 17.475 billion shares, is forecast at 22.25-26.70.

Pan Jianping, an analyst at CITIC Securities, described the new, higher price range as "really positive".

The state-owned builder of railway lines said in its prospectus that it needs 12 billion yuan (about 1.62 billion U.S. dollars) to buy new equipment and build new production lines.

Subscriptions opened on Tuesday, with 35 percent of the 4.75 billion A-shares available for institutional investors. The remaining 65 percent, or 3.03 billion shares, was reserved for individuals.

The shares will debut on the Shanghai A-share market on Dec. 3. China Railway, owned by the state-controlled China Railway Engineering Group, is also seeking to issue 3.326 billion shares in Hong Kong.

China has accelerated the listing of large state-owned enterprises (SOEs), mainly in oil and chemicals, telecommunications, transportation and the metal industry, since the value of the benchmark Shanghai Composite Index has more than doubled this year.

Minister Li Rongrong, who is with the State-owned Assets Supervision and Administration of China, has said that the next three years could see the full listing of additional SOEs or their main businesses.

In 2006, total assets of centrally administered SOEs hit 12.2 trillion yuan, up 46.5 percent from 2003. Revenue stood at 8.3 trillion yuan, up 85.3 percent.

China's rapid economic expansion has boosted railway construction. The Ministry of Railways announced on Sunday that work had started on 16 new express passenger rail projects. The country is expected to have 12,000 kilometers of express rail lines by 2020.

China Railway Group reported 75.68 billion yuan in turnover (about 10.23 billion U.S. dollars) in the first half, with 1.377 billion yuan in profits (about 186 million U.S. dollars).

(Xinhua News Agency November 21, 2007)