TIP DATE 30 SEP 2015TIP PRICE $0.365PRT - Share Price$0.300 0.275 0.250 0.225 0.200 0.175 0.150 PRIME MEDIARegional televisionManagement has reduced debt dramatically over the last 2-3 years after eliminating the dividend. This achievement has been made despite the payment of a $15m cash lump- sum to Channel 7 to renew its program deal.In late August at its FY19 result, the company made clear it can fully repay its interest- bearing debt in the current financial year (FY20) and management forecast FY20 EBITDA of $23m-$25m leading to NPAT of $8m-$10m, or EPS of 2.2 cents to 2.7 cents. This is music to Under the Radar’s ears.Once debt is repaid, the company will be able to make capital management a priority. With the growth of the Tokyo Olympics in FY21 ahead of it, PRT compares favourably with other investments in a low yield market despite no actual yield. This now looks like a classic cigar-butt investment, which should provide a positive return.This is a value play where a market leading regional television affiliate is valued at less than 40% of sales and 6 to 8 times earnings. Broadcasting is a business with high fixed costs. Revenue and results can be lumpy and unpredictable, but we think PRT can still make some good money and free cash flow.
PRT Price at posting:
16.5¢ Sentiment: Buy Disclosure: Held
