Assume the German player does the smart thing and eliminates the RAF in UK on turn 1. The German fleet in SZ113 and SUB in SZ124 moves into SZ112 and sinks the UK CA there. Germany builds a CV and 2 TRS, lands 2 FTR’s on the CV.
The bottom line for Italy is that its primary objective gets completed as it takes Egypt and will build a factory there. If UK attacks the Italian fleet with the TAC(I dont see any other way), then UK will have 9 INF defending UK.
If you use the UK CV to attack the Italian fleet, then its wont be available to counter-attack the German navy in SZ112, which may be the best chance it has to defend against Sea Lion.
The net-net is that the Italian fleet is sunk, but Egypt is Italian, Sea Lion takes UK. The French fleet and UK CV are hunted down(cant escape through Suez) assuming they go after the second half of the Italian fleet. Italy evenutally re-builds its fleet. The Axis thank you.
This strat is valid only if there is no Sea Lion and it actually makes a Sea Lion much more imperative for Germany.