RPT-UPDATE 1-CSCEC raises $7.34 bln in largest IPO in a year

(Repeats story that ran late on Thursday; no changes to text)

* World's biggest IPO in a year

* CSCEC IPO attracted 1.86 trillion yuan from bidders

* Price set at top of range; 51 times earnings

By Michael Flaherty and Samuel Shen

SHANGHAI, July 23 (Reuters) - China State Construction Engineering Corp (CSCEC) priced its IPO at the top of the indicated range, raising 50.2 billion yuan ($7.34 billion) in the world's largest public offering in more than a year.

China's biggest homebuilder is selling 12 billion A shares, or 40 percent of its expanded capital, at the top of a 3.96-4.18 yuan range, it said in a statement to the Shanghai Stock Exchange on Thursday.

China's fourth biggest initial public offering was more than 35 times oversubscribed and further evidence its equity markets have come roaring back to life. More big IPOs are expected, including a Shanghai railway group. [ID:nHKG230405]

"There's extremely ample liquidity in the financial system, chasing all kinds of assets, whether real estate or stocks, and it's kind of crazy," said Wu Binghua, strategist at Debon Securities Co.

"Investors favour China Construction also because they think the company will benefit from the government's 4 trillion yuan stimulus package, which focuses on infrastructure."

CSCEC sold 6 billion shares each to institutional and retail investors after attracting 1.857 trillion yuan from bidders.

Excessive bank lending in China is flowing into the stock and property markets and could inflate asset bubbles, Wu Xiaoling, former People's Bank of China vice governor said on Thursday.

MORE IPOS

State-run CSCEC is one of a slew of firms to get the go-ahead for an IPO since the China Securities Regulatory Commission resumed public share sales last month after a 10-month hiatus.

China's stock market .SSEC has risen around 80 percent so far this year, due in part to ample liquidity, which has been propelled by huge, government-backed new bank lending.

The amount CSCEC raised makes it the biggest IPO by far this year and the fourth biggest in China, after PetroChina (0857.HK) (601857.SS), China Shenhua Energy (1088.HK) (601088.SS), and China Construction Bank (0939.HK)(601939.SS). [ID:nSHA335066]

U.S. credit card company Visa raised $19.7 billion in March 2008. Bank of China raised $11.2 billion in March 2006, while China Citic Bank raised $6 billion in April 2007.

CSCEC has said it needs at least 41 billion yuan to develop its traditional residential property projects, build infrastructure, buy equipment and supplement working capital. CSCEC said its A-share price range represented 51.3 times 2008 earnings on a fully diluted base after the IPO.

"The IPO price looks dangerously high and might burn investors in the secondary market after the shares are listed," analyst Wu said.

The average historical PE ratio of China's listed construction and engineering companies is now around 44, according to Reuters Research.

The average PE ratio of Shanghai's A shares is about 27 times 2008 earnings, almost double Hong Kong's 14 times.

China International Capital Corp was the IPO's sole bookrunner.

(Editing by Dan Lalor)

($1=6.83 yuan)