China State Construction Engineering Corp, the nation's largest housing contractor, plans to raise as much as 50.2 billion yuan (HK$56.96 billion) in the world's biggest initial public offering in more than a year, according to a filing with the Shanghai Stock Exchange. The huge listing, the fifth-largest in the A-share market, is likely to test the exuberance of the Shanghai market, which has gained 80 per cent this year, as investors sell stocks to raise cash for the mega deal. Analysts said the issue could lock up more than two trillion yuan in subscriptions as investors vie to get in on the offering,China State Construction plans to sell as many as 12 billion shares at 3.96 yuan to 4.18 yuan each. The offer values the firm at 48.59 to 51.29 times last year's profit and the sale of a 40 per cent stake suggests China State Construction would be worth as much as 125.5 billion yuan. Responding to questions about the high price-earnings ratio, president Sun Wenjie said during an internet roadshow yesterday: 'China State Construction was last year affected by one-off factors, such as the global financial crisis and the snowstorms. Therefore, the financials [last year] can't fully reflect the real situation.' Mr Sun added that the company's profitability remained stable from 2005 to 2007 and suggested that investors take a reference on the estimated price-earnings ratios in the coming two years. China State Construction's offer, the world's largest since March last year, is about 28 times the size of Sichuan Expressway, the second-biggest sale on the mainland this year. A report from the Finance and Industry Institute of Northeast Securities estimated that the issue would prompt sell-off in other stocks as investors get into the deal. That could generate some downward pressure on the market in the short term. Last year, China State Construction's profit fell 44 per cent to 4.92 billion yuan due to the slowing property market, rising raw material prices and higher tax payments. The company and its advisers said they were expecting a recovery this year due to Beijing's 4 trillion yuan stimulus package. China State Construction is the fifth company to receive final approval to sell shares, following Guilin Sanjin Pharmaceutical, Zhejiang Wanma Cable, Your-Mart and Sichuan Expressway. However, its listing in Shanghai did not presage a listing in Hong Kong, said company secretary Meng Qingyu. The company would use the proceeds to expand in residential construction. Chairman Yi Jun said the construction business would contribute 60 per cent of total revenue.