To be honest, I wasnt expecting bulk prices that low, $665/kg (wow). Last Q they were at $1133/kg and much higher in previous q's (just look up Wefe's spreadsheet under ASP bulk). But I am not concerned much for 2 reasons:
1) I think they slashed bulk prices to wow new customers away from their competitors. Their old prices at >1000/kg were already 30% or so below the prices of their european comps. Just imagine what customers would feel about now paying half that much from a reputable Chinese company for a comparable quality and better customer service. Eventually bulk prices will go back up once enough customers have switched to them. Now I start to understand why they guided for such a low ASP 700-733/kg. Because of steep initial discounts. It's like a BOGO sales going on now (Buy a kg, get a kg free).
2) Look at net margin. It's now about 39% compared to 34% last q and last year at much higher bulk prices and a lower bulk/retail sales mix. Since retail sells for about 6 to 7x higher prices (ASP=7480/kg in FY2010)than bulk, a shift to more bulk would normally result in lower margins. But the NM went up 5 points! So that means lots of improvements in operations and cost cutting. Combine that with more bulk sales (say 300mt/yr in about 2 years vs. 60mt/yr currently) and higher sales prices (say $733/kg vs. 665/kg now), one can only expect the bottom line to go parabolic in the next few years.
No reason to jump ship. Just hang in for an easy 5-bagger to borrow Jason Nevaders' conservative words in his most recent article.
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