Place the bread flour, sugar, salt, milk powder, yeast, butter, egg, and water into a bread machine and set it on the dough setting.
Take the dough out onto a floured surface, cover with plastic wrap and let it rest for 10min.
Roll it out to about ½in (1.3cm).
Cut out 3in (8cm) circles. Place the doughnuts on pieces of parchment paper, cover the doughnuts with plastic wrap, set it somewhere warm and let it rise again until it doubles in size.
Heat your oil to 356°F (180°C) and fry each doughnut about a minute and a half on each side. Take them out onto a wire rack lined with paper towels to drain any extra oil.
Coat the doughnuts with granulated sugar while they're still warm.