DBS Vickers expects Singapore construction demand of around $24 billion in 2011-12, with public sector likely to account for about 55%.

Notes recent policy statements by PM Lee regarding urgent need for more HDB flats, enhanced public transport infrastructure; record number of sites in 2H11 Government Land Sales programme “also augurs well for construction demand”.

Says sector valuations lagging; STI +10% year-to-date, construction stocks largely flat or down, despite strengthening orderbooks.

Estimates building contractor stocks at 6x-7x forward P/E, equipment/materials players at 8x-10x.