Keppel (OTC BB: KPELY.PK), the Singaporean oil-rig maker and real estate conglomerate, reported another strong quarter, with revenues and profits both up 33%. The report prompted Citigroup to raise its estimates to 22.50 Singapore dollars (a $29.40 target price for the U.S. American Depositary Receipts), almost 20% higher than Keppel's recent closing price.

Despite the blistering growth rate, Keppel remains relatively inexpensive at roughly 2 times trailing sales and a P/E of less than 20. Return on equity increased to 19.1% from 16.4% year over year, free cash flow more than doubled, debt dropped to 0.24 times equity from 0.47, and the dividend posted a solid 20% gain to S$0.56 per share.

Why is Keppel doing so well? Its two main lines of business are Asian real estate development and making offshore drilling rigs, both very hot sectors in recent years. It also maintains an infrastructure division dedicated to environmental engineering, power generation, and facilities management in more than 30 countries.

Keppel holds minority stakes in Singapore Petroleum (44%), diversified investment holding company K1 Ventures (37%), and wireless network company MobileOne (14% held through Keppel T&T).

After its initial shipyard in 1968, Keppel listed on the Singapore exchange in 1975. Today, it's one of the top global designers and manufacturers of jack-up drilling rigs and a wide variety of other offshore oil facilities and vessels. Keppel maintains 17 shipyards around the globe to be close to its markets and customers.

It most recently completed a floating production storage and offloading facility for Devon Energy (NYSE:DVN). Keppel announced a similar contract for $135 million with Russian energy giant Lukoil in December.

Apart from Hercules Offshore (NASDAQ:HERO), Keppel is one of the few direct stock plays on the growing worldwide demand for offshore drilling equipment.

Looking ahead, Keppel plans to move into making oil and gas production and development facilities, to serve the customers who used Keppel jack-ups in their exploration programs. Management aims for the company to be the only supplier to offer a whole range of equipment from jack-ups to production. In 2005, Keppel announced a joint venture called FloaTEC with J. Ray McDermott. Together, Keppel and McDermott can draw on 22 shipyards to build the new equipment line.

Worldwide drilling activity has filled Keppel's order books through 2010. The backlog totals S$10.5 billion over the next four years.

The property division is active in Singapore, China, India, and Vietnam, among other countries. The showcase Keppel Bay development is already half-sold, with another 1,130 housing units to come. The infrastructure division recently announced a S$1.7 billion waste management facility deal in Qatar.

Citigroup expects 25% earnings growth in 2007, with a forward P/E of 19 and possible upside results from the offshore and marine division. It describes Keppel as "an undervalued, steady growth business, with relatively low earnings risk and potential upside from business/capital restructuring." Keppel shares offer investors an attractive way to own a solid, growing conglomerate at a very low premium to book value today.

You can buy the ADR for Keppel at most U.S. brokers, and it trades daily. You can also buy Keppel's property division, Keppel Land (OTC BB: KPPLF.PK), directly on U.S. markets. Citigroup has a similar buy/low risk rating on Keppel Land shares.

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Fool contributor Dale Baker, a private client portfolio manager and a former U.S. diplomat with extensive experience in Europe and Africa, owns shares in Keppel and Keppel Land for himself and his clients. It has been a top 10 holding in his portfolios since early 2005, and he still owns the first shares he bought in early 2003. He welcomes your questions or comments at dabmu@yahoo.com. The Fool has a disclosure policy.