Morgan Stanley says that Sinotrans Limited's (HKG:0598) current share price is factoring in almost an insolvency scenario for the company. However, despite a challenging external environment, the brokerage expects the 2012-14 outlook to be still profitable.

Morgan Stanley cuts its 2012 and 2013 earnings estimates for Sinotrans by 54% and 49% respectively, owing to a deteriorating export outlook with external weakness. It also reduced the stock's price target to HK$1.82 from HK$2.36 but maintained the stock's Overweight rating.

Nonetheless, the brokerage expects Sinotrans to remain profitable with a 30% earnings drop in 2012 but still 35% growth in 2013 and 31% growth in 2014. The brokerage expects Sinotrans to report net income of RMB452 million for 2012 and RMB613 million for 2013.