SK Hynix Shorts Pull Back as Stock Reclaims Ground Before Wednesday's Print

SK hynix rose 5.2% on Tuesday to KRW 1,341,000, extending a 9.6% weekly gain that runs sharply against the grain of its closest peers, most of which fell between 6% and 12% over the same period.

The lending market has shifted materially since Monday's ORTEX note documented a violent swing in availability. Borrow conditions are now among the loosest they have been all year. Availability has climbed back above 9,000%, meaning the pool of shares available to lend dwarfs the fraction actually on loan. Cost to borrow has fallen 36% over the past week to 0.22%, its lowest point in the 30-day history. The ORTEX short score has eased further to 25.1, down from 25.7 two weeks ago, ranking in the 96th percentile of the universe for low short pressure. That is the opposite direction from the aggressive short-building documented in Monday's note, where interest had climbed 14.6% in a single week to 42.3 million shares. The current data suggests a meaningful portion of that positioning has been covered into the rally.

The valuation case looks stark at these prices. The trailing price-to-earnings multiple is running near 3x, and the EV/EBITDA ratio is around 2.3x. The earnings yield factor ranks in the 95th percentile of the ORTEX universe, and the EV/EBIT score sits at the 98th percentile. That is deep-value territory for a company that analysts, 12 of whom carry outperform ratings with no downgrades on the current consensus, clearly believe is temporarily mispriced. The 30% monthly decline has compressed multiples faster than the fundamental picture has deteriorated, which is the core of the bull argument. The bear case rests on the Q3 operating profit disclosed Tuesday, 2.2 trillion won, down 34% year on year, as memory chip prices stay under pressure across both DRAM and NAND markets.

Peers moved in a different direction on the day. MU added 3.0% and MKSI gained 2.9%, while Japan's closest correlated names fell 2.7% to 3.7%. SK Hynix's outperformance on a weak day for the broader peer group adds weight to the idea that the weekly rally is partly short-covering rather than purely fresh buying. The previous ORTEX note flagged an apparent return of borrowed stock after availability had collapsed to near zero on October 20. The data since then is consistent with that pattern continuing.

Wednesday's print is therefore less a test of whether the memory cycle has turned and more a test of whether management's guidance on AI memory demand, and specifically HBM pricing and volume, is strong enough to justify buying a stock that has already moved 10% in a week on the anticipation of good news.