Why I've been buying PRT

As I mentioned in the last thread I have been slowly accumulating shares in PRT and now have a holding at an average of 33 cents. I have started this new thread mainly to hear thoughts from other posters and also to put down how I see things from the research that I have conducted.

I find PRT to be an interesting case as over the last 3 years or so the fundamentals have not changed greatly yet the share price has continued to decline steadily over this period. From over $1 dollar in 2013 to just above 32 cents today.

In the last 12 months the share price has fallen from a high of 89 cents to a low of 26 cents.

The final dividend payment last year was 3 cents with the latest interim being 2 cents. At todays closing price this shows a current dividend yield of 15.4% (franking credit is 30%). I obviously don't know what the final dividend payment for this year will be but consensus seems to be that it will be greater than 1.5 cents. This will reduce the dividend yield to 10.7% (not at all bad if you ask me).

If things don't pick up in the next six months and the next interim dividend is also 1.5 cents this will still give a greater than 9% return with franking credits on top.

Aside from the dividend yield, the last half year core net profit of 14.3 million gave an earnings per share of 3.9 cents so the actual payout ratio is not much above 50%. This shows that PRT is fairly conservative with their dividend payouts and are looking to strengthen the balance sheet and reduce debt.

Debt has been slowly reducing over the last few years from over 153 million in 2011 to a little over 70 million today. Not fantastic but not that bad either.

The latest trading update shows a core net profit after tax of between 23 and 24.5 million.

The update was released 19 April which was before the budget release that announced a reduction in licensing fees by 25%. I'm not 100% sure but I believe that PRT currently pays 4.5% of revenues as licensing fees and this will be reduced to 3.4%.

Assuming revenue of 253M and a fee of 4.5% this is approx 11.4 million, at 3.4% it is 8.6 million, a saving of 2.8 million. (I am not knowledgeable in this area and this assumption may be completely wrong - please let me know if you know otherwise).

Since the update the Federal Election has also been announced adding to PRTs advertising revenue for this financial year.

The big minus in all of this seems to be how the future will pan out for Free To Air networks and also an economy that seems to be in a rut at the moment causing a reduction in advertising spending. The later I believe is purely cyclical and will change as the economy improves. The future of FTA though I believe will remain with the broadcasters and what they can do to win back market share. A change in the Media reach law, amalgamations and more reductions in licence fees I believe will go some way to remedying the current situation.

Looking forward to hearing from other posters views on how they see the future for PRT.