In your stand mixer bowl, add the water, condensed milk, and yeast. Stir to combine.

Let sit until foamy, about 5 minutes.

Add the egg.

Add the flour and salt.

Transfer the bowl to your stand mixer, and knead at Speed 1 until a shaggy dough forms.

Add the margarine and continue kneading until incorporated.

Increase to Speed 2 and continue mixing, until a smooth and elastic dough forms, 15 minutes.

Transfer to a well-oiled bowl. Cover and let rest, until doubled in size, 20 to 25 minutes.

When the dough has doubled in size, punch the dough down to let the air out.

Transfer to a surface generously dusted with flour.

Roll the dough out until 1/2 inch thick.

Cut into the dough using a donut cutter. Arrange in a baking sheet, allowing room for the donuts to rise.

Roll up the dough scraps into a ball, cover and let rest, 5 to 10 minutes.

Roll the dough up until 1/2-inch thick and cut out more donuts. Repeat until all the dough is used up.

Brush the donuts with melted butter.

Let rise until doubled, 10 to 12 minutes.

Preheat your air fryer for 5 minutes.

Carefully lower the risen donuts into your air fryer basket.

Air fry until golden brown, 4 minutes. Repeat for the rest of the donuts.

In a large bowl, add the powdered milk and icing sugar. Whisk to thoroughly combine.

Add the fried donuts into the milk and sugar mixture, and toss until evenly coated. Repeat with the rest of the donuts.